Barbara Strozzilaan 336
1083 HN Amsterdam
The Netherlands
gssbsecretariat@globalreporting.org

Item 08 – GRI Universal Standards
Project – Revised GRI 103: Material
TopicsFor GSSB discussion
Date

8 February 2021

Meeting

25 February 2021

Project

GRI Universal Standards Project

Description

This document presents the revised draft of GRI 103: Material Topics following the
public comment feedback. Key changes are highlighted in comment boxes within
the document. Minor editorial changes have not been highlighted, but a draft
tracking all changes to the text has been included in the Annex.
Item 09 – GRI Universal Standards Project – Public comment feedback on GRI
103 Material Topics includes the public comments received on GRI 103.

This document has been prepared by the GRI Standards Division and is made available to observers
at meetings of the Global Sustainability Standards Board (GSSB). It does not represent an official
position of the GSSB. Board positions are set out in the GRI Sustainability Reporting Standards. The
GSSB is the independent standard setting body of GRI. For more information visit
www.globalreporting.org.

© GRI 2021

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Contents

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Explanatory note ..................................................................................................................................... 3

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Revised GRI 103: Material Topics .......................................................................................................... 44

Annex. Revisions with track changes ................................................................................................... 21

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Explanatory note

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The following significant revisions have been made in response to public comment feedback:7

Section 2. How to determine material topics

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Revised the introduction to more clearly signal the requirements with respect to material
topics, see lines 47-58.
Clarified more prominently the importance and role of stakeholder engagement in the process
to identify an organization’s most significant impacts, see lines 61-62.
Added a new section on identifying stakeholders within Step 1, see lines 145-159.
Clarified more prominently the various methods an organization can use to identify its
negative and positive impacts and added a reference to enterprise risk management systems,
see lines 166-180.
Clarified why it is recommended to identify negative impacts before identifying positive
impacts, in cases where an organization has limited resources available for identifying its
impacts, see lines 216-218.
Clarified terminology around ‘impact’ and ‘risk’, see lines 305-306.
Clarified that the organization may choose to prioritize other types of impacts, such asenvironmental impacts, based on severity also, see lines 347-348.
Added additional guidance on setting the threshold to determine which topics are material toreport on, see lines 371-376.

Section 3. Disclosures on material topics
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Expanded the guidance for Disclosure MT-1, see lines 439-481.
Added a new requirement for organizations to list any topics from the applicable GRI Sector
Standard(s) that have been determined as not material and to explain why they are notmaterial, see lines 486-487 and 499-541.
Relocated requirements between Disclosure MT-2 and Disclosure MT-3, as per feedback
from the regional workshops, see lines 549-553.
Expanded the requirement to report whether the organization is involved with negative
impacts through its activities or as a result of its business relationships to elicit more
information about the activities and business relationships that are involved with the impacts(this replaces the existing topic Boundary requirement), see lines 551-553 and 634-651.
Added a new requirement for organizations to report actions to manage actual and potential
positive impacts, to make clear that these actions are also to be reported, see line 559.

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Additional revisions made in response to public comment feedback are explained in comment boxes.

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The inclusion of a visual representation of the prioritization of material topics will be discussed at the
GSSB meeting on 25 February 2021.

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Other editorial revisions have been made to the text to improve clarity and consistency with the GRI
Style Guide and are explained in comment boxes.

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Revised GRI 103: Material Topics

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Section 1. Introduction

44[under review]

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Section 2. How to determine material46

topics47
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An organization reporting in accordance with the GRI Standards is required to determine its material
topics. When doing this, the organization is also required to use the applicable GRI Sector
Standard(s) (see Requirement A-3 in Section 3.1 of GRI 101: Using the GRI Standards).

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This section describes the steps that the organization should follow in determining its material topics.
Following the steps in this section will help the organization determine its material topics and report
the disclosures in Section 3 of this Standard. The steps provide guidance and are not requirementson their own.

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The Sector Standards provide information for organizations in a given sector about their most likely
material topics. The reporting organization needs to review each topic described in the applicable
Sector Standard and determine whether it is material for it to report on. Using the Sector Standards
helps the organization determine its materials topics but does not replace the need for theorganization to determine its material topics based on its specific circumstances.

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Figure 2. Process to determine material topics

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Original wording: “identify material topics”.

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Revised the introduction to more clearly signal therequirements with respect to material topics.
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and editorial revisions.

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The first three steps in the process to determine material topics relate to the organization’s ongoing
identification and assessment of impacts. This involves engaging with relevant stakeholders andexperts. These steps are conducted independently of the sustainability reporting process, but they

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inform the last step. In step 4, the organization prioritizes its most significant impacts for reporting andin this way determines its material topics.

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In each reporting period, the organization should review its material topics from the previous reporting
period to account for changes in the impacts. Changes in impacts can have resulted from changes in
its activities and business relationships. This review helps ensure the material topics represent theorganization’s most significant impacts in each new reporting period.

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The organization should document the process to determine its material topics. This includes
documenting the approach taken, decisions, assumptions, and subjective judgements made, sources
analyzed, and evidence gathered. Accurate records help the organization explain its chosen approachand report the disclosures in Section 3 of this Standard. The records facilitate analysis and assurance(see also Verifiability principle in Section 4 of GRI 101: Using the GRI Standards).

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The approach for each step will vary according to the specific circumstances of the organization, suchas its business model; sector; geographic, cultural and legal operating context; ownership structure;and the nature of its impacts. Given these specific circumstances, the steps should be systematic,
documented, replicable, and used consistently in each reporting period. The organization should
document any changes to the approach together with the rationale for those changes and theirimplications.

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In addition, the highest governance body or a senior executive should oversee the process andapprove the material topics.

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Box 1. Input to financial and value creation reporting

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The material topics and impacts that have been identified through this process inform financial andvalue creation reporting. They provide crucial input to identifying financial risks and opportunities
related to the organization’s impacts and financial valuation. This in turn helps in making financial
materiality judgments about what to recognize in financial statements. See Box 1 in GRI 101: Using
the GRI Standards for more information on sustainability reporting and financial and value creation
reporting.

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The next sections describe the four steps in more detail.

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Step 1. Understand the organization’s context

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This step involves the organization creating an initial high-level overview of its activities, business
relationships, and stakeholders, and assessing the sustainability context. This provides theorganization with critical information for identifying its actual and potential impacts.

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Relevant departments and functions within the organization can assist in this step: communications,human resources, investor relations, legal and compliance department or functions, marketing andsales, procurement, product development, etc. The GRI Sector Standards also provide useful
information.

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Activities

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The organization should consider the following in relation to its activities:

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The organization’s purpose, value or mission statements, business model, and strategies.

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The types of activities it carries out (e.g., sales, marketing, manufacturing, distribution) andthe geographic locations of these activities.

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The types of products and services it offers and the markets it serves (i.e., the types ofcustomers and beneficiaries targeted, and the geographic locations where products andservices are offered).

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The sector(s) in which the organization is active and the characteristics of the sector(s) (e.g.,whether it involves informal work, whether it is labor or resource intensive).

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The number of employees, including their employment type (full-time, part-time, or nonguaranteed hours), employment contract (permanent contract or temporary contract), anddemographic characteristics (e.g., age, gender, geographic location).

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The number of workers who are not employees and whose work is controlled by theorganization, including the types of worker (e.g., agency workers, contractors, self-employedpersons, volunteers), their contractual relationship with the organization (whether theorganization engages these workers directly or indirectly through a third party), and the work
they perform.

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Business relationships

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The organization’s business relationships include relationships with business partners, entities in its
value chain (including entities beyond the first tier), and any other entities directly linked to its
operations, products, or services. The organization should consider the following in relation to its
business relationships:

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The types of business relationships it has (e.g., joint ventures, suppliers, franchisees).

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The types of activities undertaken by those with which it has business relationships (e.g.,
manufacturing the organization’s products, providing security services to the organization).

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The nature of the business relationships (e.g., whether they are based on a long-term or
short-term contract, whether they are based on a specific project or event).

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The geographic location where the activities of the business relationships take place.

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Sustainability context

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The organization should consider the following in order to understand the sustainability context of its
activities and business relationships:

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Economic, environmental, human rights, and other societal challenges at local, regional, andglobal levels related to the organization’s sector(s) and the geographic location of its activities
and business relationships (e.g., climate change, lack of law enforcement, poverty, politicalconflict, water stress).

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The organization’s responsibility regarding the authoritative intergovernmental instrumentswith which it is expected to comply.

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Examples include the International Labour Organization (ILO) Tripartite Declaration of
Principles concerning Multinational Enterprises and Social Policy; the Organisation for
Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises;
the United Nations (UN) Framework Convention on Climate Change (UNFCCC) Paris
Agreement; the UN Guiding Principles on Business and Human Rights; and the UN
International Bill of Human Rights.

Original wording: “water security”.

The organization’s responsibility regarding the laws and regulations with which it is expected
to comply.

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See the Sustainability context principle in Section 4 of GRI 101: Using the GRI Standards.

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Stakeholders

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The organization should identify who its stakeholders are across its activities and business
relationships and engage with them to help identify its impacts.

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The organization should draw a full list of individuals and groups whose interests are affected or could
be affected by the organization’s activities. Common categories of stakeholders for organizations arebusiness partners, civil society organizations, consumers, customers, employees and other workers,
governments, local communities, non-governmental organizations, shareholders and other investors,
suppliers, trade unions, and vulnerable groups.

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The organization should also consider individuals or groups whom it does not have a direct
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Step 1.

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organization’s operations) and those who are unable to articulate their views (e.g., future
generations).

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Different lists of stakeholders can be drawn per activity, project, product or service, or otherclassification that is relevant for the organization.

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See Box 2 in this Standard for information on engaging with stakeholders.

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Step 2. Identify actual and potential impacts

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This step involves the organization identifying its actual impacts (those that have already occurred)and potential impacts (those that could occur but have not yet occurred) on the economy,
environment, and people, including impacts on human rights, across the organization’s activities andbusiness relationships. This includes negative and positive impacts, short-term and long-term
impacts, intended and unintended impacts, and reversible and irreversible impacts.

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To identify its impacts, the organization can use information from diverse sources. It can use
information from its own or third-party assessments of environmental, socioeconomic, and humanrights impacts. It can also use information from legal reviews, anti-corruption compliancemanagement systems, financial audits, occupational health and safety inspections, and shareholder
filings. In addition, it can use information from any other relevant assessments of business
relationships carried out by the organization or by industry or multi-stakeholder initiatives.

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Further information can be gathered through grievance mechanisms that it has established itself orthat have been established by other organizations. It can also use information from broader enterpriserisk management systems, provided that these systems identify the organization’s impacts on theeconomy, the environment, and people in addition to identifying impacts on the organization itself.
And it can use information from external sources, such as news organizations and civil society
organizations.

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In addition, the organization should seek to understand the concerns of its stakeholders (see Box 2 inthis Standard) and consult internal and external experts, such as civil society organizations or
academics.

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Box 2. Engaging with relevant stakeholders and experts 1

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The organization should seek to understand the concerns of its stakeholders by consulting them
directly in a way that takes language and other potential barriers (e.g., cultural differences, genderand power imbalances, divisions within the community) into account. It is important to identify andremove potential barriers to ensure that stakeholder engagement is effective.

Clarified more prominently the various methods anorganization can use to identify its negative and positive
impacts and added a reference to enterprise risk
management systems.

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Engagement with at-risk or vulnerable groups may necessitate specific approaches and need special
attention. Such approaches include removing social barriers that limit the participation of women in
public fora and removing physical barriers that prevent remotely located communities from attending ameeting.

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The organization should respect the human rights of all stakeholders and other individuals with whom
it engages (e.g., their rights to privacy, freedom of expression, and peaceful assembly and protest)
and it should protect them against reprisals (i.e., non-retaliation for raising complaints or concerns).

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In cases that involve many stakeholders or in those that involve certain types of impact that result incollective harm, broad engagement with stakeholders may not be possible. For example, in the caseof corruption, which collectively harms the population of the jurisdiction in which it takes place, or
greenhouse gas (GHG) emissions, which contribute to collective, transboundary harm. In such cases,
the organization may engage with credible stakeholder representatives or proxy organizations (e.g.,
non-governmental organizations, representative public bodies). This is also relevant in cases where

1This guidance is based on the United Nations (UN), Guiding Principles on Business and Human Rights:
Implementing the United Nations “Protect, Respect and Remedy” Framework, 2011 and the Organisation for
Economic Co-operation and Development (OECD), OECD Due Diligence Guidance for Responsible BusinessConduct, 2018.

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engaging with individuals could undermine certain rights or collective interests. For example, when
considering a decision to restructure or shut down a factory, it may be important for the organization
to engage with trade unions to mitigate the employment impacts of the decision. In such case,engaging with individual workers could undermine the right of workers to form or join trade unions andto bargain collectively.

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The degree of impact on stakeholders may inform the degree of engagement. The organization
should prioritize the most severely affected or potentially affected stakeholders for engagement.

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Where direct consultation is not possible, the organization should consider reasonable alternatives,
such as consulting credible independent experts, for example, national human rights institutions,human rights and environmental defenders, trade unions, and other members of civil society.

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In this step, the organization needs to consider the impacts described in the applicable GRI Sector
Standard and determine whether these impacts apply to it.

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Impacts may change over time as the organization’s activities, business relationships, and context
evolve. New activities, new business relationships, and major changes in operations or the operating
context (e.g., new market entry, product launch, policy change, wider changes to the organization)
could lead to changes in the organization’s impacts. For this reason, the organization should keep
assessing its context and identifying its impacts on an ongoing basis.

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In cases where an organization has limited resources available for identifying its impacts, it should
first identify its negative impacts, before identifying positive impacts, to ensure it complies withapplicable laws, regulations, and authoritative intergovernmental instruments.

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Identifying negative impacts

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This guidance is based on the UN Guiding Principles on Business and Human Rights, the OECD
Guidelines for Multinational Enterprises, and the OECD Due Diligence Guidance for Responsible
Business Conduct.

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Identifying actual and potential negative impacts with which the organization is involved or could be
involved is the first step of due diligence. The organization should consider actual and potential
impacts that it causes or contributes to through its activities, as well as actual and potential impacts
that are directly linked to its operations, products, or services by its business relationships (see Box 3
in this Standard).

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In some cases, the organization might be unable to identify actual and potential negative impacts
across all its activities and business relationships. This could be, for example, because it has diverse
or multiple global operations or because its value chain comprises many entities. In these cases, theorganization may carry out an initial assessment or scoping exercise to identify general areas acrossits activities and business relationships (e.g., product lines, suppliers located in specific geographic
locations) where negative impacts are most likely to be present and significant. Once the organization
has conducted the initial assessment or scoping exercise, it can identify and assess actual andpotential negative impacts for these general areas.

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As part of the initial assessment or scoping exercise, the organization should consider impacts
commonly associated with its sector, its products, geographic locations, or with specific organizations.
It should also consider impacts it has been involved with or knows it is likely to be involved with. In
addition to the GRI Sector Standards, the organization can use the OECD Due Diligence Guidancefor Responsible Business Conduct and the OECD sectoral guidance on due diligence2 for information
on impacts commonly associated with sectors, products, geographic locations, and specificorganizations. It can also use reports from governments, environmental agencies, internationalorganizations, civil society organizations, workers’ representatives and trade unions, national humanrights institutions, media, or other experts.

2 http://mneguidelines.oecd.org/sectors/

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impacts before identifying positive impacts, in cases
where an organization has limited resources available
for identifying its impacts.

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geographic-level, and enterprise-level impacts”.

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Box 3. Causing, contributing, or being directly linked to negative impacts 3

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An organization ‘causes’ a negative impact if its activities on their own result in the impact. For
example, if the organization pays a bribe to a foreign public official, or if it withdraws water from awater-stressed aquifer without replenishing the water level.

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An organization ‘contributes to’ a negative impact if its activities cause, facilitate, or incentivize
another entity to cause the impact. An organization can also contribute to a negative impact if its
activities in combination with the activities of other entities cause the impact. For example, if theorganization sets a short lead time for a supplier to deliver a product, despite knowing fromexperience that this production time is not feasible, this could result in excessive overtime for the
supplier’s workers. In this case, the organization could contribute to negative impacts on the healthand safety of these workers.

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An organization can cause or contribute to a negative impact through its actions as well as its failure
to take action (e.g., failure to prevent or mitigate a potential negative impact).

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Even if an organization does not cause or contribute to a negative impact, its operations, products, orservices could be ‘directly linked to’ a negative impact by its business relationship. For example, if
the organization uses cobalt in its products that is mined using child labor, the negative impact (i.e.,
child labor) is directly linked to the organization’s products through the tiers of business relationships
in its supply chain (i.e., through the smelter and minerals trader, to the mining enterprise that uses
child labor), even though the organization has not caused or contributed to the negative impact itself.

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The way an organization is involved with negative impacts determines how the organization should
address an impact and whether it has a responsibility to provide for or cooperate in its remediation(see Section 2.3 of GRI 101: Using the GRI Standards).

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For additional guidance and examples, see the OECD Due Diligence Guidance for Responsible
Business Conduct, pages 70-72, and the UN’s The Corporate Responsibility to Respect Human
Rights: An Interpretive Guide, pages 15-18.

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Identifying positive impacts

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To identify its actual and potential positive impacts, the organization should assess the manner inwhich it contributes or could contribute to sustainable development through its activities, for example,
through its products, services, investments, procurement practices, employment practices, or tax
payments. This also includes assessing how the organization can shape its purpose, business model,
and strategies so that it delivers positive impacts that contribute toward the goal of sustainable
development.

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An example of a positive impact is an organization adopting measures that lower the cost of
renewable energy for customers, thereby contributing to mitigating climate change. Another example
is an organization choosing an area with high unemployment to open a new facility so that it can hire
and train unemployed members of the local community, and in this way contribute to job creation andcommunity development.

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The organization should consider any negative impacts that could result from activities that aim for apositive contribution to sustainable development. Negative impacts cannot be offset by positive
impacts. For example, a renewable energy installation might reduce a region’s dependence on fossil
fuels and bring energy to underserved communities. But if it displaces local indigenous communities
from their lands or territories without their consent, this negative impact needs to be addressed andremediated, and it cannot be compensated by the positive impacts.

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Original wording: “their historical and cultural lands”.
Wording has been aligned with the UN Declaration on
the Rights of Indigenous Peoples.

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These concepts come from the United Nations (UN), Guiding Principles on Business and Human Rights:
Implementing the United Nations “Protect, Respect and Remedy” Framework, 2011 and the Organisation for
Economic Co-operation and Development (OECD), OECD Due Diligence Guidance for Responsible BusinessConduct, 2018.

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Step 3. Assess the significance of the impacts

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The organization may identify many actual and potential impacts. This step involves the organizationassessing the significance of its identified impacts to prioritize them. Prioritization enables theorganization to take action in order to address the impacts and also to determine its material topics forreporting. Prioritizing impacts for action is relevant where it is not feasible to address all impacts at
once.

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Assessing the significance of the impacts involves quantitative and qualitative analysis. How
significant an impact is will be specific to the organization and will be influenced by its sector(s) andbusiness relationships, among other factors. In some instances, this may need a subjective decision.
The organization should consult with relevant stakeholders (see Box 2 in this Standard) and business
relationships to assess the significance of its impacts. The organization should also consult relevantinternal or external experts.

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Assessing the significance of negative impacts

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This guidance is based on the UN Guiding Principles on Business and Human Rights, the OECD
Guidelines for Multinational Enterprises, and the OECD Due Diligence Guidance for Responsible
Business Conduct.

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The significance of an actual negative impact is assessed based on its severity. The significance of apotential negative impact is assessed based on its severity and likelihood. The combination of theseverity and the likelihood of occurrence of a negative impact can be referred to as ‘risk’.

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Severity308

The severity of an actual or potential negative impact is determined by the following characteristics:

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Scale: how grave the impact is.

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Scope: how widespread the impact is, for example, the number of individuals affected or theextent of environmental damage.

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Irremediable character: how hard it is to counteract or make good the resulting harm.

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The scale of a negative impact (i.e., how grave the impact is) can depend on whether the impact
leads to non-compliance with laws and regulations or with authoritative intergovernmental instrumentswith which the organization is expected to comply. For example, if a negative impact leads to aviolation of human rights or fundamental rights at work, or to non-compliance with the reductions in
GHG emissions to be achieved under the UNFCCC Paris Agreement, the scale of this impact can beconsidered greater.

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The scale of a negative impact can also depend on the context in which the impact takes place. For
example, the scale of the impact of an organization’s water withdrawal can depend on the area fromwhich water is withdrawn. The scale will be greater if water is withdrawn from an area affected bywater stress, compared to an area that has abundant water resources to meet the demands of water
users and ecosystems.

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Any of the three characteristics (scale, scope, and irremediable character) can make an impact
severe. But it is often the case that these characteristics are interdependent: the greater the scale or
the scope of an impact, the less remediable it is.

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The severity – and therefore the significance – of an impact are not absolute concepts. The severity ofan impact should be assessed in relation to the other impacts of the organization. For example, theorganization should compare the severity of the impacts of its greenhouse gas (GHG) emissions
against the severity of its other impacts. The organization should not assess the significance of its
GHG emissions in relation to global GHG emissions, as that comparison could lead to the misleading
conclusion that the organization’s emissions are not significant.

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Likelihood

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The likelihood of a potential negative impact refers to the chance of the impact happening. The
likelihood of an impact can be measured or determined qualitatively or quantitatively. It can be

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described using general terms (e.g., very likely, likely) or mathematically using probability (e.g., 10 in
100 or 10%) or frequency over a given time period (e.g., once every three years). 4

338

Human rights

339
340
341
342

In the case of potential negative human rights impacts, the severity of the impact takes precedence
over its likelihood. For example, a nuclear power facility may prioritize the potential impact related toloss of life in cases of natural disasters, even though natural disasters are less likely to occur thanother incidents would be.

343
344
345
346

The severity of a negative human rights impact is not limited to physical harm. Severe impacts canoccur in relation to any human right. For example, interfering with, damaging, or destroying a sacredspace without consultation or agreement with the people for whom the space has spiritual importancecan have a severe impact on people’s cultural rights.

347
348

The organization may choose to prioritize other types of impacts, such as environmental impacts,
based on severity, as well.

349

Assessing the significance of positive impacts

350
351
352

The significance of an actual positive impact is assessed based on its scale and scope. The
significance of a potential positive impact is assessed based on its scale and scope as well as its
likelihood.

353

Scale and scope

354
355
356

In the case of positive impacts, the scale of an impact refers to how beneficial the impact is or could
be, and the scope refers to how widespread the impact is or could be (e.g., the number of individuals
or the extent of environmental resources that are or could be positively affected).

357

Likelihood

358
359
360
361

The likelihood of a potential positive impact refers to the chance of the impact happening. The
likelihood of an impact can be measured or determined qualitatively or quantitatively. It can be
described using general terms (e.g., very likely, likely) or mathematically using probability (e.g., 10 in
100 or 10%) or frequency over a given time period (e.g., once every three years). 5

362

Step 4. Prioritize the most significant impacts for reporting

363
364

This step involves the organization prioritizing its impacts based on their significance, in order todetermine material topics for reporting.

365

Setting a threshold to determine which topics are material

366
367
368
369
370

The significance of an impact is assessed in relation to the other impacts the organization has
identified. The organization should arrange its impacts from most to least significant and define a cutoff point or threshold to determine which of the impacts it will focus its reporting on. The organization
should document this threshold. To facilitate prioritization, the organization should group the impacts
into topics (see Box 4 in this Standard).

371
372
373
374
375
376

For example, in order to set a threshold an organization first groups its impacts into X number of
topics and ranks them from highest to lowest priority based on their significance. The organization
then needs to determine how many of the topics it will report on, starting with those that have highest
priority. How to set the threshold is up to the organization. For transparency, the organization can
provide a visual representation of the prioritization that shows the initial list of topics it has identified
and the threshold it has set for reporting.

377
378

The significance of an impact is the sole criterion for determining whether a topic is material forreporting. The organization cannot use difficulty in reporting on a topic or the fact that it does not yet

4International Organization for Standardization (ISO), ISO 31000:2018 Risk management – Guidelines, 2018.

5 International Organization for Standardization (ISO), ISO 31000:2018 Risk management – Guidelines, 2018.

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Commented [SD37]: Type of change: revision
following public comment feedback.
Clarified that the organization may choose to prioritize
other types of impacts, such as environmental impacts,
based on severity also.

Commented [SD38]: Type of change: revision
following public comment feedback.
Added additional guidance on setting the threshold todetermine which topics are material to report.

379
380
381

manage the topic as criteria for determining whether or not to report on the topic. In cases where theorganization does not manage a material topic, it is required to report the reasons for not doing so, or
any plans to manage the topic, under Disclosure MT-3.

382
383
384

While some topics can cover both negative and positive impacts, the organization should prioritize
negative impacts separately from positive impacts, as negative impacts cannot be offset by positive
impacts.

385
386
387
388

Even if the organization has not prioritized an actual or potential negative impact for reporting, it may
still have a responsibility to address the impact in line with applicable laws, regulations, orauthoritative intergovernmental instruments (see Section 2.3 of GRI 101: Using the GRI Standards formore information).

389

Box 4. Grouping impacts into topics

390
391

Grouping impacts into topics, like ‘water and effluents’, helps the organization report in a cohesive
way on multiple impacts that relate to the same topic.

392
393
394
395
396
397

The organization can group impacts into topics according to general categories that relate to abusiness activity, stakeholder category, type of business relationship, or an economic or
environmental resource. For example, an organization’s activities result in water pollution, whichcauses negative impacts on both ecosystems and on local communities’ access to safe drinking
water. The organization can group these impacts into the topic of ‘water and effluents’ as both
impacts relate to its use of water.

398
399
400
401

The organization can refer to the topics in the GRI Topic Standards and the GRI Sector Standards.
These topics provide a useful reference for understanding the range of impacts that can be covered ineach topic. For impacts or topics that are not covered by the GRI Standards, the organization canrefer to other sources, such as authoritative intergovernmental instruments or industry standards.

402

Testing the material topics

403
404
405

The organization should test its selection of material topics against the topics in the applicable Sector
Standard. This helps the organization ensure that it has not overlooked any topics that are likely to bematerial for its sector.

406
407
408
409
410

The organization should also test its selection of material topics with potential information users andexperts who understand the organization or its sector(s) and have insight into one or more of thematerial topics. This can help the organization validate the threshold it has set to determine which
topics are material to report. Examples of experts the organization can consult are academics,
consultants, investors, lawyers, national institutions, and non-governmental organizations.

411
412
413

In addition, the organization should seek external assurance to assess the quality and credibility ofthe process for identifying material topics. See Section 5.2 in GRI 101: Using the GRI Standards formore information on seeking external assurance.

414

The outcome of the testing results in a list of the organization’s material topics.

415

Approval of the material topics

416
417

The organization’s highest governance body or a senior executive should approve the list of material
topics.

418

Determining what to report for each material topic

419
420
421

Once the organization has determined its material topics, it needs to determine what to report foreach material topic. See Requirements A-4 and A-5 in Section 3.1 of GRI 101: Using the GRI
Standards for information on how to report on material topics.

Commented [SD39]: Type of change: revision
following public comment feedback.
Original wording: “While some topics can cover both
negative and positive impacts, the organization mayprioritize negative impacts separately from positive
impacts, as negative impacts need to be discussed
independently and cannot be offset by positive
impacts.”
Commented [SD40]: Type of change: revision
following public comment feedback.
New text added.

Commented [SD41]: Type of change: revision
following public comment feedback.
New text added.
Commented [SD42]: Type of change: editorial
revision (new text added).

Commented [SD43]: Type of change: revision
following public comment feedback.
New text added.
Commented [SD44]: Type of change: revision
following public comment feedback.
New text added.
Commented [SD45]: Type of change: revision
following public comment feedback.
New text added.

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Commented [SD46]: Type of change: revision
following public comment feedback.
New text added.

422

Section 3. Disclosures on material423

topics

424
425
426
427
428

In the disclosures of this section, the organization is required to report its material topics, how it hasdetermined these topics, and how it manages each topic. Material topics are topics that represent theorganization’s most significant impacts on the economy, environment, and people, including impacts
on human rights. Section 2 of this Standard provides guidance on how to determine material topics
and helps understand and report on the disclosures in this section.

429

Disclosure MT-1 Process to determine material topics

430

Requirements

431

The organization shall:

432

a. describe the process it has followed to determine its material topics, including:

433
434
435

i.

how it has identified actual and potential, negative and positive impacts on theeconomy, environment, and people, including impacts on human rights, across its
activities and business relationships;

436

ii.

how it has prioritized the impacts for reporting based on their significance;

437
438

b. specify the stakeholders and experts whose views have informed the process todetermine its material topics.

439

Guidance

440

Guidance to MT-1

441
442

This disclosure requires information on how the organization has determined its material topics. The
list of material topics is to be reported under Disclosure MT-2.

443

Guidance to MT-1-a-i

444
445
446
447

The organization should describe the methods it has used to identify its impacts, for example,
environmental, socioeconomic, and human rights impact assessments, grievance mechanisms, orusing information from external sources, such as civil society organizations. In addition, theorganization should describe the sources and the evidence it has used to identify the impacts.

448
449
450
451

The organization should also describe the scope it has defined when identifying the impacts, forexample, whether it has identified short-term as well as long-term impacts. It should also describe any
limitations or exclusions, for example, whether it has excluded business relationships from certain
parts of its value chain when identifying the impacts.

452
453

Disclosure GOV-10 in GRI 102: About the Organization requires information on the role of the highest
governance body in overseeing the organization’s processes to identify its impacts.

454

Guidance to MT-1-a-ii

455
456

The organization should describe how it has assessed the significance of the impacts, including any
assumptions and subjective judgements it has made.

457
458
459
460

The significance of an actual negative impact is assessed based on its severity (scale, scope, andirremediable character), while the significance of a potential negative impact is assessed based on its
severity and likelihood. In the case of potential negative human rights impacts, the severity of the
impact takes precedence over its likelihood.

Page 13 of 39

Commented [SD47]: Type of change: revision
following public comment feedback.
New text added.
Commented [SD48]: Type of change: editorial
revision (new text added).
Commented [SD49]: Type of change: revision
following public comment feedback.
New text added.

461
462
463

The significance of an actual positive impact is assessed based on its scale and scope, while thesignificance of a potential positive impact is assessed based on its scale and scope as well as its
likelihood.

464

See Section 2 of this Standard for more guidance on assessing the significance of impacts.

465
466

The organization should explain if it has used a different approach to prioritize its impacts, forexample, if it has prioritized potential negative environmental impacts based on severity only.

467
468
469
470
471
472
473

The organization should also describe how it has defined the threshold to determine which topics arematerial for reporting and whether it has tested its selection of material topics with potential
information users and experts. Disclosure GOV-11 in GRI 102 requires information on the committeeof the highest governance body or senior executive position that formally reviews and approves theorganization’s sustainability reporting and ensures that the organization reports all material topics.
The organization should explain any changes to its initial selection of material topics following thetesting with external parties and the internal approval.

474
475

For transparency, the organization can provide a visual representation of the prioritization that shows
the initial list of topics it has identified and the threshold it has set for reporting.

476

Guidance to MT-1-b

477
478

MT-1-b enables the organization to explain how engagement with stakeholders and experts informs
the ongoing identification and assessment of its impacts.

479
480
481

The organization can report whether and how it has prioritized stakeholders for engagement and themethods used to engage with them. It can also report any conflicting interests that have arisen among
different stakeholders and how the organization has resolved these conflicting interests.

482

Disclosure MT-2 List of material topics

483

Requirements

484

The organization shall:

485

a. list its material topics;

486
487

b. list any topics from the applicable GRI Sector Standard(s) that have been determined as
not material and explain why they are not material;

488

c. report changes to the list of material topics compared to the previous reporting period.

489

Guidance

Added a new requirement for organizations to list any
topics from the applicable GRI Sector Standard(s) thathave been determined as not material and to explain
why they are not material.

490

Guidance to MT-2

Commented [SD56]: Type of change: editorial
revision (change in location).

491
492

This disclosure requires information on the organization’s material topics. Information on how theorganization has determined its material topics is to be reported under Disclosure MT-1.

Requirement relocated from Disclosure MT-1.

493
494

The organization is also required to include the material topics listed under this disclosure in the GRI
content index (see Requirement A-6 in Section 3.1 of GRI 101: Using the GRI Standards).

495

Guidance to MT-2-a

496
497
498

The organization can group material topics by relevant categories if this helps communicate its
impacts better. For example, the organization can indicate which of its material topics represent its
negative human rights impacts.

499

Guidance to MT-2-b

500
501

The organization is required to use the applicable GRI Sector Standard(s) when determining its
material topics (see Requirement A-3 in Section 3.1 of GRI 101: Using the GRI Standards).

Commented [SD50]: Type of change: revision
following public comment feedback.
Added guidance for organizations to explain if they haveused a different approach to prioritize their impacts thanthat outlined in Section 2.
Commented [SD51]: Type of change: editorial
revision (new text added).

Commented [SD52]: Type of change: revision
following public comment feedback.
New text added.

Commented [SD53]: Type of change: revision
following public comment feedback.
New text added.

Commented [SD54]: Type of change: editorial
revision.
Original wording: “report the material topics identified”.
Commented [SD55]: Type of change: revision
following public comment feedback.

Commented [SD57]: Type of change: revision
following public comment feedback.
Original wording: “Examples of categories include
negative human rights impacts, impacts in the supply
chain, or impacts on the environment.”.
Number of examples has been limited to one so as to
not give the impression that these categories aremutually exclusive.
Commented [SD58]: Type of change: revision
following public comment feedback.
Guidance revised in line with new requirement MT-2-b.

Page 14 of 39

502
503
504

The Sector Standards provide information for organizations in a given sector about their most likely
material topics. The topics have been identified on the basis of the sector’s most significant impacts,
using multi-stakeholder expertise, authoritative instruments, and other relevant evidence.

505
506
507
508
509
510
511

The organization needs to review each topic described in the applicable Sector Standard anddetermine whether it is material for it to report on. If any of the topics that are included in theapplicable Sector Standard have been determined by the organization as not material, theorganization is required to report this along with an explanation. This explanation provides information
users with an understanding of why topics that have been identified by experts, instruments, andevidence as likely to be material for the sector have been determined by the organization as notmaterial.

512
513
514
515

There can be cases where a topic included in the applicable Sector Standard is not material for an
organization. This could be because the specific impacts the topic covers were assessed to be absent
or because, compared to other impacts of the organization, the ones that the topic covers are notamong the most significant.

516
517
518
519
520
521
522
523
524
525

For example, an organization in the oil and gas sector is required to use the GRI Oil and Gas Sector
Standard when determining its material topics. One of the topics included in this Sector Standard island use and resettlement. Oil and gas projects often require land for operations, access routes, anddistribution. This can lead to impacts such as involuntary resettlement of local communities, which
can involve their physical displacement as well as economic displacement for them through having
lost access to resources. However, if the organization’s oil and gas projects do not result in these
impacts and will not result in these impacts in the future, the organization may determine that the topic
of land use and resettlement is not material for it to report on. In this case, the organization is required
to explain why it has determined that this topic, which is likely material for organizations in the oil andgas sector, is not material to report on.

526
527
528
529

A brief explanation of why the topic is not material is sufficient. Adding to the previous example, theorganization could explain that land use and resettlement is not a material topic because its existing
oil and gas projects are located in uninhabited areas and there are no plans to start projects in new
areas.

530
531
532
533
534

The organization is required to list all the likely material topics identified in the applicable Sector
Standard in the GRI content index (see Requirement A-6 in Section 3.1 of GRI 101: Using the GRI
Standards) and for each of these topics, to indicate whether it has determined the topic to be material
or not. The explanation of why any of these topics are determined to not be material can also be
included directly in the GRI content index.

535
536
537

In the absence of an applicable Sector Standard, the organization should explain how it has
considered impacts commonly associated with its sector, and whether any of these impacts havebeen determined as not material to report on, along with an explanation of why this is the case.

538
539

The organization should also explain how it has considered impacts commonly associated with its
products and geographic locations.

540
541

See Section 2 of this Standard and the Sector Standards for guidance on impacts commonly
associated with sectors, products, and geographic locations.

542

Guidance to MT-2-c

543
544
545

MT-2-c enables the organization to explain why a topic that it determined as material in the previous
reporting period is no longer considered to be material, or why a new topic has been determined asmaterial for the current reporting period.

Page 15 of 39

Commented [SD59]: Type of change: editorial
revision (change in location).
Guidance relocated from Disclosure MT-1.

546

Disclosure MT-3 Management of material topics

547

Requirements

548

For each material topic reported under Disclosure MT-2, the organization shall:

549
550

a. describe the actual and potential, negative and positive impacts on the economy,
environment, and people, including impacts on human rights;

551
552
553

b. report whether the organization is involved with the negative impacts through its activities
or as a result of its business relationships, and describe the activities or business
relationships;

554

c. describe its policies or commitments regarding the topic;

555

d. describe actions taken to manage the topic and related impacts, including:Commented [SD60]: Type of change: editorial
revision.
The requirement for organizations to explain the reason
for not managing a material topic or any plans tomanage it has been removed, as this duplicates theguidance that will be provided at the introduction of
every Standards. This guidance will clarify that if anorganization is unable to report information about an
item, e.g., a policy or action, as required under thedisclosure because the item does not exist, it can meetthe requirement by reporting this to be the case andexplaining the reason for not having the item and/or
describing any plans to develop it. This guidance has
been cross-referenced in the guidance for thisdisclosure. See lines 584-591.

556

i.

557
558

ii. actions to address actual negative impacts, including actions to provide for orcooperate in their remediation;

Removed requirement: “e. if the organization does not
manage a material topic, explain the reason for not
managing the topic or describe any plans to manage it”.

559

iii. actions to manage actual and potential positive impacts;

Commented [SD61]: Type of change: revision
following public comment feedback.

560

e. report the following information on the effectiveness of the actions taken:

actions to prevent or mitigate potential negative impacts;

561

i.

562

ii. goals, targets, and indicators used to evaluate progress;

563
564

iii. evidence of whether or not the actions have been effective, including progress
toward the goals and targets;

565
566

iv. lessons learned and how these have been incorporated into the organization’s
operational policies and procedures;processes used to track the effectiveness of the actions;describe how engagement with stakeholders has informed the actions taken (MT-3-d) and
how it has informed whether the actions have been effective (MT-3-e).

Expanded the requirement to report whether theorganizations is involved with negative impacts throughits activities or as a result of its business relationships toelicit more information about the activities and business
relationships (this replaces the existing topic Boundary
requirement).
See corresponding guidance at lines 634-651.
Commented [SD62]: Type of change: revision
following public comment feedback.
Requirements “a” and “b” have been relocated from
Disclosure MT-2 following feedback from regional
workshops.

567
568

f.

569

Guidance

570

Guidance to MT-3

571

This disclosure requires the organization to explain how it manages each of its material topics.

Added a new requirement for organizations to reportactions to manage actual and potential positive impacts,
to make clear that these actions are also to be reported.

572
573

The requirements in this disclosure apply to every material topic. This means that the organization isrequired to report this disclosure for each of its material topics.

Commented [SD64]: Type of change: editorial
revision.

574
575
576
577
578
579

In addition to this disclosure, there may also be disclosures and guidance in the Topic Standards andSector Standards that address reporting on how the organization manages a topic. For example,
some Topic Standards contain disclosures about specific actions or methods to manage a topic. The
organization does not need to repeat this information under Disclosure MT-3 if it is already reported
under another disclosure. The organization can report the information once and provide a reference tothis information to fulfill the corresponding MT-3 requirements.

580
581
582
583

If the organization’s approach to managing a material topic, such as its policies or actions taken,
applies to other material topics, the organization does not need to repeat this information for each
topic. The organization can report this information once, with a clear explanation of all the topics itcovers.

584
585

If the organization is unable to report information about an item (e.g., a policy or action) as required
under the disclosure because the item does not exist, it can meet the requirement by reporting this toCommented [SD63]: Type of change: revision
following public comment feedback.

Page 16 of 39

Original wording: “evidence of the extent to which theactions taken have been effective, including progress
toward the goals and targets;”.

586
587
588

be the case. The disclosure does not require the organization to implement the item, such as thepolicy, but to report if it does not exist. Additionally, the organization can explain the reason for nothaving the item and/or describe any plans to develop it.

589
590
591

If the organization does not manage a material topic, it can meet the requirements under thisdisclosure by explaining the reason for not managing the topic and/or describing any plans to manage
it.

592

Guidance to MT-3-a

593
594
595
596

MT-3-a enables the organization to indicate if a topic is material because of negative impacts, positive
impacts, or both. MT-3-a does not require a list of all the impacts identified or a detailed description of
the impacts. Instead, the organization can provide a high-level overview of the impacts it has
identified.

597

Describing negative impacts

Commented [SD67]: Type of change: revision
following public comment feedback.

598

The organization can describe:

New text added.

599
600

•

whether the negative impacts are actual or potential, and for potential impacts, whether they
are short-term or long-term;

601
602
603

•

whether the impacts are systemic (e.g., child labor or forced labor in countries where theorganization operates or sources inputs from) or are related to individual incidents (e.g., an oil
spill);

604
605

•

the stakeholders (without identifying specific individuals) or economic or environmental
resources that are affected or could be affected, and their geographic location.

606
607
608
609
610
611
612
613
614

Reporting on negative impacts can help the organization demonstrate that it recognizes these impacts
and that it has taken action or intends to take action to address them. The organization may haveconcerns about reporting on negative impacts even if these impacts are publicly known. In cases
where negative impacts are publicly known, failure to acknowledge these impacts and to explain how
they are being addressed could have consequences for the organization financially, operationally, or
reputationally. If the organization is unable to disclose specific information (e.g., because of
stakeholders’ right to privacy), it can provide the information in aggregated or anonymized form, or it
can make a reference to the impacts commonly associated with its sector, its products, or geographic
locations.

615

Describing positive impacts

616

The organization can describe:

617
618

•

whether the positive impacts are actual or potential, and for potential impacts, whether they
are short-term or long-term;

619
620

•

the activities that result in the positive impacts (e.g., products, services, investments,
procurement practices);

621
622

•

the stakeholders (without identifying specific individuals) or economic or environmental
resources that benefit or could benefit, and their geographic location.

623

Guidance to MT-3-b

624
625
626
627

The way an organization is involved with negative impacts determines the organization’s responsibility
toward addressing the impacts (see Section 2.3 of GRI 101: Using the GRI Standards). MT-3-b
provides contextual information to understand the actions taken by the organization in order tomanage its negative impacts (reported under requirement MT-3-d-i and MT-3-d-ii).

628
629
630
631
632
633

MT-3-b requires the organization to report whether it is involved with the negative impacts through its
activities or as a result of its business relationships. Where possible, the organization should also
report whether it is or could be causing or contributing to the negative impacts through its activities, orwhether the impacts are or could be directly linked to its operations, products, or services by its
business relationships even if it has not contributed to them. See Box 3 in Section 2 of this Standard
for more information on causing, contributing, or being directly linked to negative impacts.

Page 17 of 39

Commented [SD65]: Type of change: editorial
revision (new text added).
Commented [SD66]: Type of change: revision
following public comment feedback.
Guidance relocated from Disclosure MT-2.

Commented [SD68]: Type of change: revision
following public comment feedback.
New text added.
Commented [SD69]: Type of change: editorial
revision (new text added).

Commented [SD70]: Type of change: revision
following public comment feedback.
New text added.
Commented [SD71]: Type of change: editorial
revision (new text added).
Commented [SD72]: Type of change: revision
following public comment feedback.
Guidance relocated from Disclosure MT-2.

634
635
636

MT-3-b also requires describing the activities or business relationships. This enables the organization
to indicate if the impacts related to a material topic are widespread in the organization’s activities orbusiness relationships, or if the impacts concern specific activities or business relationships.

637
638
639
640

If the impacts concern specific activities, the organization should describe the types of activities (e.g.,
manufacturing, retail) and their geographic location. If the impacts concern specific business
relationships, the organization should describe the types of business relationships (e.g., suppliers of
raw materials, franchisees), their position in the value chain, and their geographic location.

641
642
643
644
645
646

For example, if the organization has identified that its activities at specific sites could cause waterpollution, it should describe the types of activities carried out at these sites and the geographic
location of these sites. Or if the organization has identified that it is directly linked to child labor by thebusiness relationships in its supply chain, it should specify the types of suppliers using child labor(e.g., sub-contractors doing embroidery work for the organization’s products) and the geographic
location of these suppliers.

647
648
649
650
651

The organization can provide additional contextual information for understanding the extent of its
impacts. Adding to the previous examples, the organization can report how many of its sites could
cause water pollution (e.g., 60% of sites, 5 out of 12 sites) or the proportion of production these sites
represent, or it can report the estimated number of sub-contractors using child labor that doembroidery work for the organization.

652

Guidance to MT-3-c

653
654
655
656
657

MT-3-c requires a description of policies or commitments the organization has developed specificallyfor the topic, in addition to the policy commitments reported under Disclosure RBC-2 in GRI 102:
About the Organization. If the organization has described its policies for a material topic under
Disclosure RBC-2, it can provide a reference to this information under MT-3-c and does not need torepeat the information. See Disclosure RBC-2 for guidance on how to report on policies.

658
659

When reporting on commitments, the organization should provide a statement of intent to manage thetopic, or explain:

Commented [SD73]: Type of change: revision
following public comment feedback.
Guidance revised in line with the changes to therequirement. The requirement now elicits more
information about the activities and business
relationships involved with the negative impacts (thisreplaces the existing topic Boundary requirement).
Commented [SD74]: Type of change: revision
following public comment feedback.
New text added.

660•

the organization’s stance on the topic;

661
662

•

whether the commitment to manage the topic is based on regulatory compliance or extends
beyond it;

663•

compliance with authoritative intergovernmental instruments related to the topic.

664

Guidance to MT-3-d

665
666
667

MT-3-d enables the organization to explain how it responds to its impacts. MT-3-d does not require a
detailed description of actions taken in relation to each impact. Instead, the organization can provide ahigh-level overview of how it manages its impacts.

668
669

The organization should report how it integrates the findings from its identification and assessment of
impacts across relevant internal functions and processes, including:

670
671

•

the level and function within the organization that has been assigned responsibility for
managing the impacts;

672
673

•

the internal decision-making, budget allocation, and oversight processes (e.g., internal audit)
to enable effective actions to manage the impacts.

674
675

Disclosure GOV-10 in GRI 102 requires information on the role of the highest governance body inoverseeing the organization’s processes to manage its impacts.

676
677

The organization should also report how it manages actual impacts that were identified in previous
reporting periods and which it continues to manage during the current reporting period.

Commented [SD75]: Type of change: revision
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revision (new text added).
Commented [SD77]: Type of change: revision
following public comment feedback.
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Page 18 of 39

678

Guidance to MT-3-d-i

679

The organization should report:

680
681

•

examples of actions taken to prevent or mitigate potential negative impacts (e.g.,
adaptation/modification measures, facility upgrading, training, red-flag systems);

682•

approaches taken to prevent or mitigate systemic negative impacts;

683•

how the organization applies the precautionary principle, including:

684
685

-

how the organization proactively informs the public about potential negative impacts of its
activities, products, and services, and how it deals with related questions and complaints;

686
687

-

the organization’s support or contribution to scientific research related to evaluating
potential negative impacts of its activities, products, and services;

688
689

-

the organization’s participation in collaborative efforts to share knowledge and to prevent
negative impacts of its activities, products, and services;

690
691
692
693
694

•

how the organization uses or increases its leverage to motivate its business relationships toprevent or mitigate potential negative impacts. For example, whether it uses or increases its
leverage by enforcing contractual requirements, implements incentives (such as futureorders), provides training and support, or actively collaborates with other actors to motivate its
business relationships to prevent or mitigate potential negative impacts;

695
696
697

•

whether the organization has terminated a business relationship because it lacks the leverage
to prevent or mitigate potential negative impacts and, if so, whether it has assessed if
terminating the relationship could itself result in negative impacts.

698

See Guidance to RBC-2-a-iii in GRI 102 for more information on ‘precautionary principle’.

699

Guidance to MT-3-d-ii

700

The organization should report:

701
702

•

examples of actions taken to remediate actual negative impacts, including examples of
specific remedies or types of remedy provided;

703
704

•

how grievance mechanisms or other remediation processes (reported under Disclosure RBC5 in GRI 102) have made it possible for actual negative impacts to be remediated.

705
706

See Disclosure RBC-5 for more information on grievance mechanisms and other remediation
processes.

707

Guidance to MT-3-e

708
709
710
711

MT-3-e enables the organization to report on the effectiveness of its actions to manage its impacts.
Tracking the effectiveness of its actions is necessary for an organization so that it can learn if its
policies and processes are being implemented optimally. It is also necessary for knowing if it has
responded effectively to its impacts and to drive continuous improvement.

712
713
714

The organization should also report information on the effectiveness of its actions to manage actual
impacts from previous reporting periods. This applies in cases where the organization has assessed
the effectiveness of these actions or derived lessons during the current reporting period.

715

Guidance to MT-3-e-i

716
717
718

Processes used to track the effectiveness of actions can include internal or external auditing orverification, impact assessments, measurement systems, stakeholder feedback, grievancemechanisms, external performance ratings, and benchmarking.

719

Guidance to MT-3-e-ii

720

When reporting on goals and targets, the organization should report:

721•

how the goals and targets are set;

Page 19 of 39

Commented [SD78]: Type of change: revision
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New text added.

722
723
724

•

whether and how the goals and targets take into account the sustainability context in which
the impacts take place (e.g., the limits and demands placed on environmental resources,
social and economic objectives and goals);

725
726

•

whether the goals and targets are informed by expectations in authoritative intergovernmental
instruments and, where relevant, by scientific consensus;

727
728

•

whether goals and targets are mandatory (based on legislation) or voluntary. If they aremandatory, the organization can list the relevant legislation;729•

the organization’s activities or business relationships to which the goals and targets apply;730•

the baseline for the goals and targets;•the timeline for achieving the goals and targets.

731
732
733

Targets can be qualitative (e.g., implementing a management system by a certain date) or
quantitative (e.g., reducing GHG emissions by a certain percentage by a certain date).

734
735
736
737
738

The indicators used to evaluate progress can also be qualitative or quantitative. Quantitative
indicators can bring precision and enable comparisons. Qualitative information is often needed to put
quantitative information into context, enable its interpretation, and determine which comparisons andconclusions are likely to be most valid. The Topic Standards and Sector Standards include qualitativeand quantitative indicators.

739

Guidance to MT-3-e-iii

740
741
742
743

The organization should report examples that give evidence of whether or not the actions have beeneffective, such as the outcomes of internal or external auditing or verification, data collected throughmeasurement systems, and stakeholder feedback. The evidence should show that there is a credible
link between the specific action taken by the organization and the effective management of impacts.

744
745
746
747
748

For example, to show the effectiveness of the actions it has taken to support its suppliers withimproving their working conditions, the organization can report survey feedback from the suppliers’
workers showing that working conditions have improved. Additional evidence the organization can
provide include data showing a decrease in the number of incidents identified through independent
audits.

749
750
751

Similarly, to demonstrate the effectiveness of its actions to improve the quality of its water discharge,
the organization can report data showing a decrease in the concentration of total dissolved solids(mg/L) in the water discharge.

752
753
754

When reporting progress toward its goals and targets, the organization should report whether
progress is satisfactory or not. If a goal or target has not been achieved, the organization should
explain why.

755

Guidance to MT-3-e-iv

756
757

Managing impacts is typically an ongoing challenge requiring continuous improvement based onlearning from practice.

758
759
760

MT-3-e-iv does not require a detailed description of lessons learned in relation to each material topic.
Instead, the organization can provide examples to show how it incorporates lessons learned in orderto manage impacts more successfully in the future.

761
762
763
764

For instance, the organization can provide examples of lessons learned that have led to changes in its
policies or practices (e.g., training for workers, giving additional attention to the performance of
suppliers), or that have led to plans for such changes, in order to manage impacts more successfullyin the future.

765
766

Lessons learned may be derived from the organization’s own processes (e.g., root cause analysis),from its business relationships, or from stakeholder or expert feedback.

Commented [SD79]: Type of change: revision
following public comment feedback.
Original wording: “whether and how the goals andtargets take into account the context in which theimpacts take place and are informed by expectations ininternationally recognized instruments and, where
relevant, by scientific consensus;”.
Changes made in line with the changes to the
Sustainability context principle.

Commented [SD80]: Type of change: editorial
revision (new text added).

Commented [SD81]: Type of change: revision
following public comment feedback.
New text added.

Commented [SD82]: Type of change: revision
following public comment feedback.
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Page 20 of 39

767

Guidance to MT-3-f

768
769
770

The organization can explain, for example, whether and how affected stakeholders have been
involved in determining an appropriate remedy for a negative impact, or how stakeholder feedback isused to assess the effectiveness of the actions taken.

771

Annex. Revisions with track changes

772

Section 2. Identifying How to773

determine material topics

774
775
776

An organization reporting in accordance with the GRI Standards is required to determine its material
topics. When doing this, the organization is also required to use the applicable GRI Sector
Standard(s) (see Requirement A-3 in Section 3.1 of GRI 101: Using the GRI Standards).

777
778
779
780

This section describes the steps that the organization should go throughfollow in order to
identifydetermining its material topics; following these. Following the steps is in this section will help
the organization determine its material topics and report the disclosures in Section 3 of this Standard.
The steps provide guidance and are not a requirement requirements on their own.

781
782
783
784
785

The Sector Standards provide information for organizations in a given sector about their most likely
material topics. The reporting organization needs to review each topic described in the applicable
Sector Standard and determine whether it is material for it to report on. Using the Sector Standards
helps the organization determine its materials topics but does not replace the need for theorganization to determine its material topics based on its specific circumstances.

786

Figure 2. Steps for identifying Process to determine material topics

787
788
789
790

The first three of these stepssteps in the process to determine material topics relate to theorganization’s ongoing identification and assessment of impacts as part of its regular activities inorder to manage its impacts. This involves engaging with relevant stakeholders and experts. These
three steps in turnsteps are conducted independently of the sustainability reporting process, but they

Page 21 of 39

791
792
793

inform the last step, which is the identification of material topics for reporting. In step 4, theorganization prioritizes its most significant impacts for reporting and in this way determines its material
topics.

794
795
796
797
798

In subsequent reporting periods each reporting period, the organization should review the previously
identifiedits material topics from the previous reporting period to account for changes in the impacts.
Changes in impacts can have resulted from changes in its activities and business relationships thatlead to a change in its impacts. This review helps to ensure the material topics are still representative
ofrepresent the organization’s most significant impacts in each new reporting period.

799
800
801
802
803

The organization should document the process to determine its material topics. This includes
documenting the approach taken, decisions, assumptions, and subjective judgements made, sources
analyzed, and evidence gathered. Accurate records help the organization explain its chosen approachand report the disclosures in Section 3 of this Standard. The records facilitate analysis and assurance(see also Verifiability principle in Section 4 of GRI 101: Using the GRI Standards).

804
805
806
807
808
809
810

The approach applied for each step will vary according to the specific circumstances of theorganization, such as its business model; sector; geographic, cultural and legal operating context;
ownership structure; and the nature of its impacts. Given these specific circumstances, theorganizationsteps should use abe systematic, documented, replicable, and documented approach toidentify its material topics. used consistently in each reporting period. The organization should
document any changes to the approach together with the rationale for those changes and theirimplications. In particular, the organization should:

811
812
813

•

document the process for identifying its material topics, including the approach, assumptions,and decisions taken. Accurate records help the organization to fulfil relevant disclosures andto explain its chosen approach, and they facilitate analysis and assurance;

814
815

•

apply the steps to identify material topics consistently over time, and document any changes
to the approach along with their implications;

816
817

•

be transparent about any subjective judgments it has made in the process to identify material
topics.

818
819

In addition, the highest governance body or a senior executive should oversee the process andapprove the identified material topics.

820

Box 1. Input to financial and value creation reporting

821
822
823
824
825
826

The material topics and impacts that have been identified through this process inform financial andvalue creation reporting. They provide crucial input to identifying financial risks and opportunities
related to the organization’s impacts and financial valuation. This in turn helps in making financial
materiality judgments about what to recognize in financial statements. See Box 1 in GRI 101: Using
the GRI Standards for more information on sustainability reporting and financial and value creation
reporting.

827

The next sections describe the four steps in more detail.

828

Step 1. AssessUnderstand the organization’s context

829
830
831
832

This step involves the organization assessing creating an initial high-level overview of its activities
and, business relationships, and stakeholders, and assessing the sustainability context in which thesetake place. This provides the organization with critical information for identifying its actual andpotential impacts.

833
834
835
836
837

Relevant departments and functions within the organization can assist with assessing its activities andbusiness relationship and their context, for example,in this step: communications, human resources,
investor relations, legal and compliance department or functions, marketing and sales, procurement,
and product development, etc. The GRI Sector Standards also provide useful contextual information
for the organization’s sector(s)..

Page 22 of 39

838

Assessing Activities

839

The organization should assessconsider the following forin relation to its own activities:

840•

The organization’s purpose, value or mission statements, business model, and strategies.

841
842

•

The types of activities it carries out (e.g., sales, marketing, manufacturing, distribution) andthe geographic locations of these activities.

843
844
845

•

The types of products and services it offers, and the markets servedit serves (i.e., the types ofcustomers and beneficiaries targeted, and the geographic locations where products andservices are offered).

846
847

•

The sector(s) in which the organization is active and the characteristics of the sector(s) (e.g.,whether it involves informal work, orwhether it is labor or resource intensive).

848
849
850

•

The number of employees, including their employment type (full-time or, part-time, or nonguaranteed hours), employment contract (permanent contract or temporary contract), anddemographic characteristics (e.g., age, gender, age, geographic location).

851
852
853
854
855

•

The number of workers who are not employees that performand whose work foris controlled
by the organization, including the types of worker (e.g., agency workers, contractors, selfemployed persons, volunteers), their contractual relationship with the organization (whether
the organization engages these workers directly or indirectly through a third party), and thenature of work they perform.

856

Assessing Business relationships

857
858
859
860

The organization’s business relationships include relationships with business partners, entities in its
value chain (including entities beyond the first tier), and any other entities directly linked to its
operations, products, or services. The organization should assessconsider the following forin relation
to its business relationships:

861•

The types of business relationships it has (e.g., joint ventures, suppliers, franchisees).

862
863
864

•

The types of activities undertaken by thesethose with which it has business relationships(e.g., manufacturing the organization’s products, providing security services to theorganization).

865
866

•

The nature of the business relationships (e.g., whether they are based on a long-term or
short-term contract, orwhether they are based on a specific project or event).

•

The geographic location where the activities of the business relationships take place.

867
868

AssessingSustainability context

869
870

The organization should assessconsider the following in order to understand the sustainability context
in whichof its activities and business relationships take place:

871
872
873
874
875

•

Economic conditions, societal issues, and , environmental, human rights, and other societal
challenges at local, regional, and global levels related to the organization’s sector(s) and thegeographic locations of its activities and business relationships (e.g., poverty, political conflict,water security, climate change, lack of law enforcement, poverty, political conflict, water
stress).

876
877
878

•

The organization’s responsibility in relation toregarding the international standards andagreementsauthoritative intergovernmental instruments with which it is expected to comply;
for example,.

879
880
881
882
883
884

Examples include the International Bill of Human Rights; the International Labour
Organization (ILO),) Tripartite Declaration of Principles concerning Multinational Enterprises
and Social Policy; the Organisation for Economic Co-operation and Development (OECD),
OECD) Guidelines for Multinational Enterprises; or the United Nations (UN),) Framework
Convention on Climate Change (UNFCCC) Paris Agreement; the UN Guiding Principles on
Business and Human Rights; and the UN International Bill of Human Rights.

Page 23 of 39

885
886

•

The organization’s responsibility in relation toregarding the laws and regulations with which it
is expected to comply.

887
888

•

The organization’s vision and mission, strategy, business model, and policy commitments forresponsible business conduct.

889

See the Sustainability context principle in Section 4 of GRI 101: Using the GRI Standards.

890

Stakeholders

891
892

The organization should identify who its stakeholders are across its activities and business
relationships and engage with them to help identify its impacts.

893
894
895
896
897

The organization should draw a full list of individuals and groups whose interests are affected or could
be affected by the organization’s activities. Common categories of stakeholders for organizations arebusiness partners, civil society organizations, consumers, customers, employees and other workers,
governments, local communities, non-governmental organizations, shareholders and other investors,
suppliers, trade unions, and vulnerable groups.

898
899
900
901

The organization should also consider individuals or groups whom it does not have a direct
relationship with (e.g., workers in the supply chain or local communities that live at a distance from theorganization’s operations) and those who are unable to articulate their views (e.g., future
generations).

902
903

Different lists of stakeholders can be drawn per activity, project, product or service, or otherclassification that is relevant for the organization.

904

See Box 2 in this Standard for information on engaging with stakeholders.

905

Step 2. Identify actual and potential impacts

906
907
908
909
910
911

This step involves the organization identifying its actual impacts (those that have already occurred)and potential, negative and positive impacts (those that could occur but have not yet occurred) on theeconomy, environment, and people, including impacts on human rights, across its owntheorganization’s activities and its business relationships. This includes negative and positive impacts,
short-term and long-term impacts, intended and unintended impacts, and reversible and irreversible
impacts.

912
913
914
915
916
917
918

To identify its actual and potential negative impacts, the organization can use information from diverse
sources. It can use information from its own or third-party assessments of environmental, socioeconomicsocioeconomic, and human rights impact assessments,impacts. It can also use informationfrom legal reviews, anti-corruption compliance management systems, financial audits, occupational
health and safety inspections, and shareholder filings. In addition, it can use information from anyother relevant assessments of its business relationships. It can use carried out by the organization or
by industry or multi-stakeholder initiatives.

919
920
921
922
923
924

Further information can be gathered through grievance mechanisms that it has established itself orthat have been established by other organizations. It can also use information from broader enterpriserisk management systems, provided that these systems identify the organization’s impacts on theeconomy, the environment, and people in addition to identifying impacts on the organization itself.
And it can use information from external sources, such as news organizations and civil society
organizations.

925
926
927

In order to idenitfy its impacts accuratelyIn addition, the organization should seek to understand theconcerns of its stakeholders (see Box 12 in this Standard). The organization can also and consult withinternal experts as well as withand external experts, such as civil society organizations or academics.

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under ‘Identifying negative impacts’. It has been
relocated here following public comment feedback. The
move has not been tracked to clearly show the changes
to the original text.

928

Box 12. Engaging with relevant stakeholders and experts 6

929
930
931
932
933

The organization should seek to understand the concerns of its stakeholders by consulting them
directly in a way that takes language and other potential barriers into account. Identifying andremoving potential barriers to stakeholder engagement (e.g., language and(e.g., cultural differences,
gender and power imbalances, divisions within the community) into account. It is important to identify
and remove potential barriers to ensure that stakeholder engagement is effective.

934
935
936
937
938

Engagement with at-risk or vulnerable groups might call formay necessitate specific approaches andneed special attention, such as. Such approaches that remove include removing social barriers
limitingthat limit the participation of women in public fora, or approaches that remove the andremoving physical barriers preventingthat prevent remotely located communities from attending ameeting.

939
940
941
942

The organization should respect the human rights of all stakeholders and other individuals with whom
it engages with (e.g., their rights to privacy, freedom of expression, and peaceful assembly andprotest) and it should protect them against reprisals (i.e., non-retaliation for raising complaints orconcerns).

943
944
945
946
947
948
949
950
951
952
953

In situationscases that involve many stakeholders or in those that involve certain types of impact that
result in collective harm, broad engagement with stakeholders mightmay not be possible. For
example, in the case of corruption, which collectively harms the populations of the jurisdiction in which
it takes place, or greenhouse gas (GHG) emissions, which contribute to collective, transboundary
harm. In thesesuch cases, the organization may engage with credible stakeholder representatives orproxy organizations (e.g., non-governmental organizations, representative public bodies). This is also
relevant in situationscases where engaging with individuals could undermine certain rights orcollective interests. For example, when considering a decision to restructure or shut down a factory, it
may be important for the organization to engage with trade unions to mitigate the employment
impacts of the decision. This is because in this situationIn such case, engaging with individual
workers could undermine the right of workers to form or join trade unions and to bargain collectively.

954
955

The degree of impact on stakeholders may inform the degree of engagement. The organization
should prioritize the most severely affected or potentially affected stakeholders for engagement.

956
957
958
959

Where direct consultation is not possible, the organization should consider reasonable alternatives,
for example,such as consulting credible independent experts, such asfor example, national humanrights institutions, human rights and environmental defenders, trade unions, and other members ofcivil society.

960
961

In this step, the organization needs to consider the impacts described in the applicable GRI Sector
Standard and determine whether these impacts apply to it.

962
963
964
965
966
967

Impacts may change over time as the organization’s activities and, business relationships, and theircontext evolve. For example, New activities or, new business relationships or, and major decisions orchanges in operations or the operating context (e.g., new market entry, product launch, policychange, or wider changes to the organization) could lead to changes in the organization’s impacts.
For this reason, the organization should identifykeep assessing its context and identifying its impacts
on an ongoing basis.

968
969
970
971

In situationscases where an organization has limited resources available for identifying its impacts, it
should start by identifyingfirst identify its negative impacts, before moving onto identifying positive
impacts, to ensure it complies with applicable laws, regulations, and authoritative intergovernmental
instruments.

972

Identifying negative impacts

6This guidance is based on the United Nations (UN), Guiding Principles on Business and Human Rights:
Implementing the United Nations “Protect, Respect and Remedy” Framework, 2011 and the Organisation for
Economic Co-operation and Development (OECD), OECD Due Diligence Guidance for Responsible BusinessConduct, 2018.

Page 25 of 39

973
974
975

Theis guidance in this section on identifying negative impacts is based on the UN Guiding Principles
on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, and the OECD
Due Diligence Guidance for Responsible Business Conduct.

976
977
978
979
980

Identifying the actual and potential negative impacts with which the organization is involved or could
be involved is the first step of due diligence. The organization should consider actual and potential
impacts that it causes or contributes to through its own activities, as well as thoseactual and potential
impacts that are directly linked to its operations, products, or services by its business relationships(see Box 23 in this Standard).

981
982
983
984
985
986
987
988

In some cases, the organization might be unable to identify actual and potential negative impacts
across all its activities and business relationships. This could be, for example, because it has diverse
or multiple global operations or because its value chain comprises a large number ofmany entities. In
these cases, the organization may carry out an initial assessment or scoping exercise to identify
general areas across its activities and business relationships (e.g., product lines, suppliers located in
specific geographic locations) where negative impacts are most likely to be present and significant.
Once the organization has conducted the initial assessment or scoping exercise, it can then identify
and assess specific actual and potential negative impacts for these general areas.

989
990
991
992
993
994
995
996
997
998
999
1000

As part of thise initial assessment or scoping exercise, the organization canshould consider sectorspecific, product-specificimpacts commonly associated with its sector, its products, geographic-level,
and enterprise-level impacts, as well as other locations, or with specific organizations. It should also
consider impacts it has facedbeen involved with or knows it is likely to face be involved with. In
addition to the GRI Sector Standards identify impacts that are most likely to be present and significant
for organizations in a given sector., the organization can also use the OECD Due Diligence Guidancefor Responsible Business Conduct and the OECD sector-specific sectoral guidance on due diligence7
guidance for information on sector-specific, product-specificimpacts commonly associated withsectors, products, geographic-level, and enterprise-level impacts, as well as locations, and specificorganizations. It can also use reports from governments, environmental agencies, internationalorganizations, civil society organizations, workers’ representatives and trade unions, national humanrights institutions, media, or other experts.

1001

Box 23. Causing, contributing, or being directly linked to negative impacts8

1002
1003
1004

An organization ‘causes’ a negative impact if its activities on their own result in the impact. For
example, if the organization pays a bribe to a foreign public official, or if it withdraws water from awater-stressed aquifer without replenishing the water level.

1005
1006
1007
1008
1009
1010
1011

An organization ‘contributes to’ a negative impact if its activities cause, facilitate, or incentivize
another entity to cause the impact. An organization can also contribute to a negative impact if its
activities in combination with the activities of other entities cause the impact. For example, if theorganization sets a short lead time for a supplier to deliver a product, despite knowing from pastexperience that this production time is not feasible, this could contribute toresult in excessive overtime
for the supplier’s workers. In this case, the organization could contribute to negative impacts on thehealth and safety of these workers.

1012
1013
1014

An organization can cause or contribute to a negative impact through its actions as well as its failure
to take action (e.g., failure to prevent or mitigate a potential negative impact that the organization
could have foreseen).

1015
1016
1017
1018
1019
1020

Even if an organization does not cause or contribute to a negative impact, its operations, products, orservices could be connected to a negative impact of a business relationship. In this case, theorganization’s operations, products, or services are ‘directly linked to’ a negative impact by its
business relationship. For example, if the organization sources and uses cobalt in its products that ismined using child labor, the negative impact (i.e., child labor) is directly linked to the organization’s
products through the tiers of business relationships in its supply chain (i.e., withthrough the smelter,7

http://mneguidelines.oecd.org/sectors/
These concepts come from the United Nations (UN), Guiding Principles on Business and Human Rights:
Implementing the United Nations “Protect, Respect and Remedy” Framework, 2011 and the Organisation for
Economic Co-operation and Development (OECD), OECD Due Diligence Guidance for Responsible BusinessConduct, 2018.
8

Page 26 of 39

1021
1022

and minerals trader, orto the mining enterprise that uses child labor), even though the organization
has not caused or contributed to the negative impact itself.

1023
1024
1025

The way an organization is involved with negative impacts is important for determiningdetermines
how the organization should address an impact and whether it has a responsibility to provide for orcooperate in its remediation (see Section 2.3 of GRI 101: Using the GRI Standards).

1026
1027
1028

For additional guidance and examples, see the OECD Due Diligence Guidance for Responsible
Business Conduct, pages 70-72, and the UN’s The Corporate Responsibility to Respect Human
Rights: An Interpretive Guide, pages 15-18.

1029

Identifying positive impacts

1030
1031
1032
1033
1034
1035

To identify its actual and potential positive impacts, the organization should assess the manner inwhich it contributes or could contribute to sustainable development through its own activities, forexample, through its products, services, investments, procurement practices, as an
employeremployment practices, or as a taxpayertax payments. This also includes assessing how theorganization can shape its purpose, business model, and strategies so that it delivers positive impacts
that contribute toward the goal of sustainable development.

1036
1037
1038
1039
1040

ExamplesAn example of a positive impacts could beimpact is an organization adopting measures thatlower the cost of renewable energy for customers, orthereby contributing to mitigating climate change.
Another example is an organization choosing an area with high unemployment to open a new facility
so that it can hire and train unemployed members of the local community, and in this way contributeto job creation and community development.

1041
1042
1043
1044
1045
1046

The organization should consider any negative impacts that could result from activities that aim for apositive contribution to sustainable development. Negative impacts cannot be offset by other positive
impacts. For example, a renewable energy installation might reduce a region’s dependence on fossil
fuels and bring energy to underserved communities. But if it displaces local indigenous communities
from their historical and cultural lands or territories without their consent, this negative impact needs
to be addressed and remediated, and it cannot be offsetcompensated by the other positive impacts.

1047

Step 3. Assess the significance of identifiedthe impacts

1048
1049
1050
1051
1052

The organization mightmay identify many actual and potential impacts. This step involves theorganization assessing the significance of its identified impacts to prioritize them for action and also toprioritize them for reporting in Step 4. Prioritization enables the organization to take action in order toaddress the impacts and also to determine its material topics for reporting. Prioritizing impacts foraction is relevant where it is not feasible to address all impacts at once.

1053
1054
1055
1056
1057
1058
1059

Assessing the significance of the impacts involves quantitative and qualitative analysis. How
significant an impact is will be specific to the organization, and will be influenced by its sector(s),) andbusiness relationships, among other factors. In some instances, this can necessitatemay need asubjective decision. Therefore, The organization should consult with relevant stakeholders (see Box
12 in this Standard) and business relationships on how to determineassess the significance of its
identified impacts. The organization canshould also consult relevant internal or external experts asneeded..

1060

Assessing the significance of negative impacts

1061
1062
1063

The guidance in this section on assessing the significance of negative impactsThis guidance is basedon the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational
Enterprises, and the OECD Due Diligence Guidance for Responsible Business Conduct.

1064
1065
1066
1067

The significance of an actual negative impact is assessed by consideringbased on its severity. The
significance of a potential negative impact is assessed by consideringbased on its severity as well as
itsand likelihood. The combination of the severity and the likelihood of occurrence of a negative
impact can be referred to as ‘risk’.

1068

Severity

Page 27 of 39

1069

The severity of an actual or potential negative impact is determined by the following characteristics:

1070

•

Scale: how grave the impact is.

1071
1072

•

Scope: how widespread the impact is, for example, the number of individuals affected or theextent of environmental damage.

•Irremediable character: how hard it is to counteract or make good the resulting harm.

1073
1074
1075
1076
1077
1078
1079

The scale of a negative impact (i.e., how grave the impact is) can depend on whether the impact
leads to non-compliance with the laws and regulations or with the international standards andagreementsauthoritative intergovernmental instruments with which the organization is expected tocomply. For example, if a negative impact leads to a violation of human rights or fundamental rights atwork, or to non-compliance with the reductions in GHG emissions to be achieved under the UNFCCC
Paris Agreement, the scale of this impact can be considered greater.

1080
1081
1082
1083
1084

The scale of a negative impact can also depend on the context in which the impact takes place. For
example, the scale of the impact of an organization’s water withdrawal can depend on the area from
wherewhich water is withdrawn. The scale will be greater if water is withdrawn from an area affectedby water stress, compared to an area that has abundant water resources to meet the demands of
ecosystems and other water users and ecosystems.

1085
1086
1087

Any of the three characteristics (scale, scope, and irremediable character) can make an impact
severe. AlthoughBut it is often the case that these characteristics are interdependent: the greater the
scale or the scope of an impact, the less remediable it is.

1088
1089
1090
1091
1092
1093
1094

The severity – and therebyfore the significance – of an impact are not absolute concepts;. The
severity of an impact should be assessed relativein relation to the other impacts of the organization
has identified. For example, the organization should compare the severity of the impacts of its
greenhouse gas (GHG) emissions against the severity of its other identified impacts. The organization
should not assess the significance of its GHG emissions relativein relation to global GHG emission
levelsemissions, as that comparison could lead to the misleading conclusion that the organization’s
emissions are not significant.

1095

Likelihood

1096
1097
1098
1099

The likelihood of a potential negative impact refers to the chance of the impact happening. The
likelihood of an impact can be measured or determined qualitatively or quantitatively, and. It can be
described using general terms (e.g., very likely, likely) or mathematically (using a probability, (e.g., 10
in 100 or 10%,%) or a frequency over a given time period, (e.g., once every three years).9

1100

Negative Human rights impacts

1101
1102
1103
1104

In the case of potential negative human rights impacts, the severity of the impact takes precedence
over its likelihood. For example, a nuclear power facility may prioritize the potential impact related toloss of life in cases of natural disasters, even though natural disasters are less likely to occur thanother incidents at the facilitywould be.

1105
1106
1107
1108

The severity of a negative human rights impact is not limited to physical harm. Severe impacts canoccur in relation to any human right can be subject to severe impacts. For example, interfering with,damaging, or destroying a sacred space without consultation or agreement with the people who
usefor whom the space has spiritual importance can have a severe impact on people’s cultural rights.

1109
1110

The organization may choose to prioritize other types of impacts, such as environmental impacts,
based on severity, as well.

1111

Assessing the significance of positive impacts

1112
1113
1114

The significance of an actual positive impact is assessed by considering based on its scale andscope. The significance of a potential positive impact is assessed by considering based on its scaleand scope on the one hand, andas well as its likelihood on the other.

1115

Scale and scope

9 International Organization for Standardization (ISO), ISO 31000:2018 Risk management – Guidelines, 2018.

Page 28 of 39

1116
1117
1118
1119

In the case of positive impacts, the scale of an impact refers to how beneficial the impact is or wcould
be, and the scope refers to how widespread the impact is or wcould be, for example, (e.g., thenumber of individuals or the extent of environmental resources that are or wcould be positively
affected.).

1120

Likelihood

1121
1122
1123
1124

The likelihood of a potential positive impact refers to the chance of the impact happening. The
likelihood of an impact can be measured or determined qualitatively or quantitatively, and. It can be
described using general terms (e.g., very likely, likely) or mathematically (using a probability, (e.g., 10
in 100 or 10%,%) or a frequency over a given time period, (e.g., once every three years).10

1125

Step 4. Prioritize the most significant impacts for reporting

1126
1127

This step involves the organization prioritizing its impacts based on their significance, in order to
identifydetermine material topics for reporting.

1128

Setting a threshold to determine which topics are material to report

1129
1130
1131
1132
1133
1134

The significance of an impact is assessed relativein relation to the other impacts the organization has
identified. The organization should arrange the identifiedits impacts from most to least significant, anddefine a cut-off point or threshold to determine which of the impacts it will focus its reporting on. The
organization should document theis threshold and criteria used when identifying material topics. To
facilitate prioritization, the organization should group the identified impacts into topics (see Box 34 inthis Standard).

1135
1136
1137
1138
1139
1140

For example, in order to set a threshold an organization first groups its impacts into X number of
topics and ranks them from highest to lowest priority based on their significance. The organization
then needs to determine how many of the topics it will report on, starting with those that have highest
priority. How to set the threshold is up to the organization. For transparency, the organization can
provide a visual representation of the prioritization that shows the initial list of topics it has identified
and the threshold it has set for reporting.

1141
1142
1143
1144
1145
1146

The significance of an impact is the sole criterion for determining whether a topic is material to report
onfor reporting. The organization cannot use difficulty in reporting on a topic or the fact that it does not
yet manage the topic as the basiscriteria for determining whether or not to report on thate topic. In
cases where the organization does not manage a material topic and related impacts, the organization,
it is required to report the reasons for not doing so, or any plans to manage the topic, under
Disclosure MT-3.

1147
1148
1149

While some topics can cover both negative and positive impacts, the organization mayshould
prioritize negative impacts separately from positive impacts, as negative impacts need to be
discussed independently and cannot be offset by positive impacts.

1150
1151
1152
1153

Even if the organization has not prioritized an actual andor potential negative impact for reporting, theorganization it may still hasve a responsibility to understand how to address the impact in line with theapplicable laws, regulations, or internationally recognizedauthoritative intergovernmental instruments(see Section 2.3 of GRI 101: Using the GRI Standards for more information).

1154

Box 34. Grouping impacts into topics

1155
1156

Grouping impacts into topics, like ‘water and effluents’, helps the organization report in a cohesive
way on multiple impacts that relate to the same topic.

1157
1158
1159
1160
1161

The organization can group impacts into topics according to general categories of impacts that relate
to a business activity, a stakeholder category, a type of business relationship, or an economic or
environmental resource. For example, if an organization identifiesorganization’s activities result inwater pollution as one potential, which causes negative impact of its activities,impacts on both
ecosystems and the reducedon local communities’ access of local communities to safe drinking water
10 International Organization for Standardization (ISO), ISO 31000:2018 Risk management – Guidelines, 2018.

Page 29 of 39

1162
1163

as another potential negative impact, it can . The organization can group these impacts underinto the
topic of ‘water and effluents’. as both impacts relate to its use of water.

1164
1165
1166
1167
1168

The organization can refer to the topic names includedtopics in the GRI Topic Standards and the GRISector Standard(s) that apply to its sector(s).Standards. These topics provide a useful reference forunderstanding the range of impacts that can be covered in each topic. For impacts or topics that are
not covered by the GRI Standards, the organization can refer to other sources, such as authoritativeintergovernmental instruments or industry standards.

1169

Testing the material topics with information users and experts

1170
1171
1172

The organization should test its selection of material topics against the topics in the applicable Sector
Standard. This helps the organization ensure that it has not overlooked any topics that are likely to bematerial for its sector.

1173
1174
1175
1176
1177
1178

The organization can should also test its selection of material topics with potential information users
and experts who understand the organization or its sector(s) and have insight into one or more of thematerial topics identified. This can help the organization validate the threshold it has set to determine
which topics are material to report. Examples of experts the organization can consult include are nongovernmental organizations, academics, consultants, investors, lawyers, national institutions, andinvestorsnon-governmental organizations.

1179
1180
1181

In addition, the organization should seek external assurance to assess the quality and credibility ofthe process for identifying material topics. See Section 5.2 in GRI 101: Using the GRI Standards formore information on seeking external assurance.

1182

The outcome of the testing results in a list of the organization’s material topics.

1183

Approval of the material topics by highest governance body

1184
1185

The organization’s highest governance body or a senior executive should approve the identifiedlist of
material topics.

1186

Determining what to report for each material topic

1187
1188
1189

Once the organization has identified determined its material topics, it needs to determine what toreport for each material topic. See Requirements A-4 and A-5 in Section 3.1 of GRI 101: Using the
GRI Standards for information on how to report on material topics.

1190

Section 3. ReportingDisclosures on

1191

material topics

1192
1193
1194
1195
1196
1197
1198

In the disclosures inof this section provide information about how, the organization has
identifiedis required to report its material topics, the materialhow it has determined these topics andrelated impacts identified, and how it manages each material topic. Material topics are topics thatreflectrepresent the organization’s most significant impacts on the economy, environment, andpeople, including impacts on human rights. Section 2 of this Standard provides guidance on
identifyinghow to determine material topics, which help and helps understand theseand report on
the disclosures in this section.

1199
1200

Disclosure MT-1 Identification of Process to determine material
topics and related impacts

1201

Requirements

Page 30 of 39

1202

The organization shall:

1203
1204

a. report howdescribe the process it has identifiedfollowed to determine its material topics,
including:

1205
1206
1207

i.

how it has identified actual and potential, negative and positive impacts on theeconomy, environment, and people, including impacts on human rights, across its
own activities and business relationships;

1208

ii.

how it has prioritized the impacts for reporting based on their significance;

1209
1210

b. specify the stakeholders and experts whose views have informed the identification
ofprocess to determine its material topics.

1211

Guidance

1212

Guidance to MT-1

1213
1214
1215

This disclosure coversrequires information on how the organization has identified determined its
material topics and related impacts. The list of material topics and related impacts that theorganization has identified areis to be reported under Disclosure MT-2.

1216

Guidance to MT-1-a-i

1217
1218
1219
1220

The organization should describe the methods it has used to identify its impacts, for example,
environmental, socio-economic, and human rights impact assessments, grievance mechanisms, orusing information from external sources, such as civil society organizations. In addition, theorganization should describe the sources and the evidence it has used to identify the impacts.

1221
1222
1223
1224

The organization should also describe the scope it has defined when identifying the impacts, forexample, whether it has identified short-term as well as long-term impacts. It should also describe any
limitations or exclusions, for example, whether it has excluded business relationships from certain
parts of its value chain when identifying the impacts.

1225
1226

Disclosure GOV-10 in GRI 102: About the Organization requires information on the role of the highest
governance body in overseeing the organization’s processes to identify its impacts.

1227

Guidance to MT-1-a-ii

1228
1229

The organization should describe how it has assessed the significance of the impacts identified. ,including any assumptions and subjective judgements it has made.

1230
1231
1232
1233

The significance of aan actual negative impact is assessed based on its severity (scale, scope, andirremediable character), while the significance of a potential negative impact is assessed based on its
severity and likelihood. In the case of potential negative human rights impacts, the severity of the
impact takes precedence over its likelihood.

1234
1235
1236

The significance of aan actual positive impact is assessed based on its scale, and scope, and while
the significance of a potential positive impact is assessed based on its scale and scope as well as its
likelihood.

1237

See Section 2 of this Standard for more guidance on assessing the significance of impacts.

1238
1239

The organization should explain if it has used a different approach to prioritize its impacts, forexample, if it has prioritized potential negative environmental impacts based on severity only.

1240
1241
1242
1243
1244
1245
1246

The organization should also describe how it has defined the threshold to determine which topics arematerial to report,for reporting and whether it has tested its selection of material topics with potential
information users and experts. Disclosure GOV-11 in GRI 102 requires information on the committeeof the highest governance body or senior executive position that formally reviews and approves theorganization’s sustainability reporting and ensures that the organization reports all material topics.
The organization should explain any changes to its initial selection of material topics following thetesting with external parties and the internal approval.

Page 31 of 39

1247
1248

For transparency, the organization can provide a visual representation of the prioritization that shows
the initial list of topics it has identified and the threshold it has set for reporting.

1249

Guidance to MT-1-b

1250
1251

MT-1-b enables the organization to explain how engagement with stakeholders and experts informs
the ongoing identification and assessment of its impacts.

1252
1253
1254

The organization can report whether and how it has prioritized stakeholders for engagement and themethods used to engage with them. It can also report any conflicting interests that have arisen among
different stakeholders and how the organization has resolved these conflicting interests.

1255

Disclosure MT-2 List of material topics and related impacts

1256

Requirements

1257

The organization shall:

1258

a. report thelist its material topics it has identified;

1259
1260

b. list any topics from the applicable GRI Sector Standard(s) that have been determined as
not material and explain why they are not material;

1261

c. report changes in to the list of material topics compared to the previous reporting period.

1262

Guidance

1263

Guidance to MT-2

1264
1265
1266

This disclosure coversrequires information on the organization’s material topics and related impacts
identified by the organization. Information on how the organization has identified determined its
material topics is to be reported under Disclosure MT-1.

1267
1268
1269

AnThe organization reporting in accordance with the GRI Standards is also required to include thematerial topics reportedlisted under this disclosure in the GRI content index (see Requirement A-6 in
Section 3.1 of GRI 101: Using the GRI Standards).

1270

Guidance to MT-2-a

1271
1272
1273
1274

The organization can group material topics by relevant categories if this helps communicate its
impacts better. ExamplesFor example, the organization can indicate which of categories includeitsmaterial topics represent its negative human rights impacts, impacts in the supply chain, or impacts
on the environment.

1275

Guidance to MT-2-b

1276
1277
1278
1279
1280
1281
1282

The organization should describe how it has considered sector-specific, product-specific, andgeographic-level impacts when identifying its material topics. The organization should also explain
whether and why it does not report on some of these impacts as part of its material topics; forexample, because the specific impact was assessed to be absent or because the impact was notamong the most significant to report on. Reporting this information indicates whether the organization
recognizes sector-specific, product-specific, and geographic-level impacts, and provides information
users with adequate contextual information to assess the organization’s selection of material topics.

1283
1284

The organization is required to use the applicable GRI Sector Standard(s) when determining its
material topics (see Requirement A-3 in Section 3.1 of GRI 101: Using the GRI Standards).

1285
1286
1287

The Sector Standards provide information for organizations in a given sector about their most likely
material topics. The topics have been identified on the basis of the sector’s most significant impacts,
using multi-stakeholder expertise, authoritative instruments, and other relevant evidence.

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Commented [SD84]: This requirement was previously
under Disclosure MT-1. It has been relocated toDisclosure MT-2 following public comment feedback.
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1288
1289
1290
1291
1292
1293
1294

The organization needs to review each topic described in the applicable Sector Standard anddetermine whether it is material for it to report on. If any of the topics that are included in theapplicable Sector Standard have been determined by the organization as not material, theorganization is required to report this along with an explanation. This explanation provides information
users with an understanding of why topics that have been identified by experts, instruments, andevidence as likely to be material for the sector have been determined by the organization as notmaterial.

1295
1296
1297
1298

There can be cases where a topic included in the applicable Sector Standard is not material for an
organization. This could be because the specific impacts the topic covers were assessed to be absent
or because, compared to other impacts of the organization, the ones that the topic covers are notamong the most significant.

1299
1300
1301
1302
1303
1304
1305
1306
1307
1308
1309
1310
1311
1312

For example, an organization in the oil and gas projectsector is required to use the GRI Oil and Gas
Sector Standard when determining its material topics. One of the topics included in this Sector
Standard is land use and resettlement. Oil and gas projects often requires land for its operations,access routes, and distribution. This can lead to impacts such as involuntary resettlement of local
communities, which can involve their physical displacement as well as economic displacement suchas loss of for them through having lost access to resources. An organization undertaking anHowever,if the organization’s oil and gas project would need to consider, in the early stages of due diligence,
whether the project could result in involuntaryprojects do not result in these impacts and will not resultin these impacts in the future, the organization may determine that the topic of land use andresettlement of communities. If the project does not result in involuntary resettlement of communitiesis
not material for it to report on. In this case, the organization should still report is required to explain
why it has determined that this topic, which is commonly associated withlikely material fororganizations in the oil and gas sector, wasis not identified as material to report, to make clear thatthe topic was not overlooked on.

1313
1314
1315
1316

A brief explanation of why the topic is not material is sufficient. Adding to the previous example, theorganization could explain that land use and resettlement is not a material topic because its existing
oil and gas projects are located in uninhabited areas and there are no plans to start projects in new
areas.

1317
1318
1319
1320
1321

The organization is required to list all the likely material topics identified in the applicable Sector
Standard in the GRI content index (see Requirement A-6 in Section 3.1 of GRI 101: Using the GRI
Standards) and for each of these topics, to indicate whether it has determined the topic to be material
or not. The explanation of why any of these topics are determined to not be material can also be
included directly in the GRI content index.

1322
1323
1324

In the absence of an applicable Sector Standard, the organization should explain how it has
considered impacts commonly associated with its sector, and whether any of these impacts havebeen determined as not material to report on, along with an explanation of why this is the case.

1325
1326

The organization should also explain how it has considered impacts commonly associated with its
products and geographic locations.

1327
1328
1329

See Section 2 of this Standard and the GRI Sector Standards for guidance on sector-specific,
product-specific, and geographic-level impacts impacts commonly associated with sectors, products,
and geographic locations.

1330

Guidance to MT-2-c

1331
1332
1333

MT-2-c enables the organization shouldto explain why a topic that was identifiedit determined asmaterial in the previous reporting period is deemed to no longer considered to be material, or why a
new topic has been identified determined as material for the current reporting period.

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Commented [SD85]: This guidance was previously
under Disclosure MT-1. It has been relocated toDisclosure MT-2 following public comment feedback.
The move has not been tracked to clearly show thechanges to the original text.

1335

Disclosure MT-3 Management of material topics and related
impacts

1336

Requirements

1337

For each material topic reported under Disclosure MT-2, the organization shall:

1338
1339

a. describe the actual and potential, negative and/or positive impacts identified on theeconomy, environment, and people, including impacts on human rights;

1340
1341
1342

b. report whether the organization is involved with the negative impacts through its own
activities or as a result of its business relationships. , and describe the activities orbusiness relationships;

1343

c. describe its policies or commitments forregarding the topic;

1344

d. describe actions taken to manage the topic and related impacts, in particularincluding:

1334

1345

i.

1346
1347

ii. actions taken to address actual negative impacts, including actions to provide for orcooperate in their remediation;

1348

iii. actions to manage actual and potential positive impacts;

1349

actions taken to prevent or mitigate potential negative impacts;

e. report the following information abouton the effectiveness of the actions taken:

1350

i.

1351

ii. goals, targets, and indicators used to evaluate progress;

1352
1353

iii. evidence of the extent to whichwhether or not the actions taken havebeen effectivebeen effective, including progress toward the goals and targets;

1354
1355

iv. lessons learned and how these have been incorporated into the organization’s
operational policies and procedures;processes used to track the effectiveness of the actions taken;

1356
1357

f.

describe how engagement with stakeholders has informed the actions taken (MT-3-bd)
and how it has informed whether the actions taken have been effective (MT-3-c);e).

1358
1359

g. if the organization does not manage a material topic, explain the reason for not managing
the topic or describe any plans to manage it.

1360

Guidance

1361

Guidance to MT-3

1362
1363

This disclosure enablesrequires the organization to explain how it manages each of its identified
material topics and related impacts.

1364
1365
1366

The requirements in this disclosure apply to every material topic. An This means that the organization
preparing a report in accordance with the GRI Standards is required to report this disclosure for eachof its identified material topics.

1367
1368
1369
1370
1371

BesidesIn addition to this disclosure, there may also be disclosures and guidance in the Topic
Standards and Sector Standards can also contain disclosures and guidance forthat address reportingon how the organization manages a topic. For example, some Topic Standards contain disclosuresabout specific actions or methods to manage impacts for a topic. The organization does not need torepeat this information under Disclosure MT-3 if it is already reported under another disclosure. The

Page 34 of 39

Commented [SD86]: These requirements werepreviously under Disclosure MT-2. They have been
relocated to Disclosure MT-3 following public comment
feedback. The move has not been tracked to clearlyshow the changes to the original text.

1372
1373

organization can report thise information once and provide a reference to this information to fulfill thecorresponding MT-3 requirements.

1374
1375
1376
1377

If the organization’s approach to managing a material topic, such as its policies or actions taken,
applies to other material topics, the organization does not need to repeat this information for each
topic. The organization can report this information once, with a clear explanation of all the topics itcovers.

1378
1379
1380
1381
1382

If the organization is unable to report information about an item (e.g., a policy or action) as required
under the disclosure because the item does not exist, it can meet the requirement by reporting this tobe the case. The disclosure does not require the organization to implement the item, such as thepolicy, but to report if it does not exist. Additionally, the organization can explain the reason for nothaving the item and/or describe any plans to develop it.

1383
1384
1385

If the organization does not manage a material topic, it can meet the requirements under thisdisclosure by explaining the reason for not managing the topic and/or describing any plans to manage
it.

1386

Guidance to MT-3-a

1387
1388
1389
1390

MT-2-b provides contextual information to understand how the organization manages each material
topic and related impacts (reported under Disclosure MT-3). MT-2-b does not require a detailed
description of impacts or a detailed explanation of how the organization is involved with each negative
impact; the organization can provide a high-level description of the impacts it has identified.

1391
1392
1393
1394

MT-2-b-i covers impacts related to each material topic. ItMT-3-a enables the organization to indicate if
a topic is material because of negative impacts, positive impacts, or both. MT-3-a does not require alist of all the impacts identified or a detailed description of the impacts. Instead, the organization can
provide a high-level overview of the impacts it has identified.

1395

Describing negative impacts

1396

The organization can describe:

1397
1398

•

whether the negative impacts are actual or potential, and for potential impacts, whether they
are short-term or long-term;

1399
1400
1401

•

whether the impacts are systemic (e.g., child labor or forced labor in countries where theorganization operates or sources inputs from) or are related to individual incidents (e.g., an oil
spill);

1402
1403

•

the stakeholders (without identifying specific individuals) or economic or environmental
resources that are affected or could potentially be affected, and their geographic location.

1404
1405
1406
1407
1408
1409
1410
1411
1412
1413

Reporting on negative impacts can help the organization demonstrate that it recognizes these impacts
and that it has taken action or intends to take action to address them. The organization mightmay
have concerns about reporting on negative impacts even if these impacts are already publicly known.
In fact,cases where negative impacts are publicly known, failure to acknowledge these impacts and to
explain how they are being addressed could have consequences for the organization (e.g.,
reputationally, financially, operationally)., or reputationally. If the organization is unable to disclose
specific information (e.g., because that could affect theof stakeholders’ right to privacy of
stakeholders), it can provide the information in aggregated or anonymized form, or it can
describemake a reference to the impacts commonly associated with its sector-specific, productspecific, its products, or geographic-level impacts locations.

1414

Describing positive impacts

1415

The organization can describe:

1416
1417

•

whether the positive impacts are actual or potential, and for potential impacts, whether they
are short-term or long-term;

1418
1419

•

the activities that result in the positive impacts (e.g., products, services, investments,
procurement practices);

Page 35 of 39

1420
1421
1422

•

the stakeholders (without identifying specific individuals) or economic or environmental
resources that are benefittedbenefit or could potentially be benefittedbenefit, and theirgeographic location.

1423

Guidance to MT-23-b-ii

1424
1425
1426
1427
1428

The way an organization is involved with negative impacts is important for determiningdetermines theorganization’s responsibility toward addressing the impacts (see Section 2.3 of GRI 101: Using the
GRI Standards). MT-23-b-ii therefore provides contextual information for understandingto understandthe actions taken by the organization in order to manage its negative impacts (reported under
Disclosurerequirement MT-3-d-i and MT-3-d-ii).

1429
1430
1431
1432
1433
1434

MT-23-b-ii requires the organization to report whether it is involved with the negative impacts throughits own activities or as a result of its business relationships. Where possible, the organization should
also report whether it is or could be causing or contributing to the negative impacts through its own
activities, or whether the impacts are or could be directly linked to its operations, products, or services
by its business relationships even if it has not contributed to them. See Box 23 in Section 2 of thisStandard for more information on causing, contributing, or being directly linked to negative impacts.

1435
1436
1437

MT-3-b also requires describing the activities or business relationships. This enables the organization
to indicate if the impacts related to a material topic are widespread in the organization’s activities orbusiness relationships, or if the impacts concern specific activities or business relationships.

1438
1439
1440
1441
1442

The organization can also reportIf the impacts concern specific activities, the organization should
describe the types of activities (e.g., manufacturing, retail) orand their geographic location. If the
impacts concern specific business relationships, the organization should describe the types ofbusiness relationships (e.g., suppliers of raw materials, franchisees involved with the identified
negative impacts), their position in the value chain, and their geographic location.

1443
1444
1445
1446
1447
1448

For example, if the organization has identified that its activities at specific sites could cause waterpollution, it should describe the types of activities carried out at these sites and the geographic
location of these sites. Or if the organization has identified that it is directly linked to child labor by thebusiness relationships in its supply chain, it should specify the types of suppliers using child labor(e.g., sub-contractors doing embroidery work for the organization’s products) and the geographic
location of these suppliers.

1449
1450
1451
1452
1453

The organization can provide additional contextual information for understanding the extent of its
impacts. Adding to the previous examples, the organization can report how many of its sites could
cause water pollution (e.g., 60% of sites, 5 out of 12 sites) or the proportion of production these sites
represent, or it can report the estimated number of sub-contractors using child labor that doembroidery work for the organization.

1454

Guidance to MT-3-ac

1455
1456
1457
1458
1459
1460
1461

MT-3-c requires a description of policies or commitments the organization has developed specificallyfor the topic, in addition to the policy commitments reported under Disclosure Disclosures RBC-2 andRBC-3 in GRI 102: About the Organization provide guidance on how to report on policies. If theorganization’s. If the organization has described its policies for a material topic have been describedunder Disclosures RBC-2 and RBC-3, the organization, it can provide a reference to this information
under MT-3-ac and does not need to repeat the information. See Disclosure RBC-2 for guidance on
how to report on policies.

1462
1463

When reporting on commitments, the organization should provide a statement of intent to manage thetopic and related impacts, or explain the following:

1464

•

the organization’s stance on the topic.;

1465
1466

•

whether the commitment to manage the topic is based on regulatory compliance or extends
beyond it.;

1467
1468

•

compliance with international standardsauthoritative intergovernmental instruments related tothe topic.

1469

Guidance to MT-3-bd

Page 36 of 39

Commented [SD87]: This guidance was previously
under Disclosure MT-2. It has been relocated toDisclosure MT-3 following public comment feedback.
The move has not been tracked to clearly show thechanges to the original text.

Commented [SD88]: This guidance was previously
under Disclosure MT-2. It has been relocated toDisclosure MT-3 following public comment feedback.
The move has not been tracked to clearly show thechanges to the original text.

1470
1471
1472
1473

MT-3-b provides information to understand howd enables the organization to explain how it responds
to its identified impacts. MT-3-bd does not require a detailed description of actions taken in relation toeach impact;. Instead, the organization can provide examples to showa high-level overview of how it
manages its impacts.

1474
1475

The organization should include information onreport how it integrates the findings from its
identification and assessment of impacts across relevant internal functions and processes, including:

1476
1477

•

the level and function within the organization that has been assigned responsibility for
managing the impacts;

1478
1479

•

the internal decision-making, budget allocation, and oversight processes (e.g., internal audit)
to enable effective actions to manage the impacts.

1480
1481

Disclosure GOV-10 in GRI 102 requires information on the role of the highest governance body inoverseeing the organization’s processes to manage its impacts.

1482
1483

The organization should also report how it manages actual impacts that were identified in previous
reporting periods and which it continues to manage during the current reporting period.

1484

Guidance to MT-3-bd-i

1485

The organization should report:

1486
1487

•

examples of actions taken to prevent or mitigate potential negative impacts (e.g.,
adaptation/modification measures, facility upgrading, training, red-flag systems);

1488

•

approaches taken to prevent or mitigate systemic negative impacts;

1489

•

how the organization applies the precautionary principle, including:

1490
1491

-

how the organization proactively informs the public about potential negative impacts of its
activities, products, and services, and how it deals with related questions and complaints;

1492
1493

-

the organization’s support or contribution to scientific research related to evaluating
potential negative impacts of its activities, products, and services;

1494
1495

-

the organization’s participation in collaborative efforts to share knowledge and to prevent
negative impacts of its activities, products, and services;

1496
1497
1498
1499
1500
1501

•

how the organization uses or increases its leverage to promptmotivate its business
relationships to prevent or mitigate potential negative impacts. For example, the organization
can usewhether it uses or increases its leverage by enforcing contractual requirements,
implementings incentives (such as future orders), providinges training and support, or actively
collaboratinges with other actors to motivate its business relationships to prevent or mitigate
potential negative impacts;

1502
1503
1504

•

whether the organization has terminated a business relationship because it lacks the leverage
to prevent or mitigate potential negative impacts, and, if so, whether it has assessed if
terminating the relationship could itself result in negative impacts.

1505
1506

See Guidance to RBC-2-a-iii in GRI 102: About the Organization for more information on‘precautionary principle’.

1507

Guidance to MT-3-bd-ii

1508

The organization should report:

1509
1510

•

examples of specific actions taken to remediate actual negative impacts, including examplesof specific remedies or types of remedy provided;

1511
1512
1513

•

how the grievance mechanisms or other remediation processes (reported under Disclosure
RBC-5 in GRI 102: About the Organization) have made it possible for actual negative impacts
to be remediated.

1514
1515

See Disclosure RBC-5 for more information on grievance mechanisms and other remediation
processes.

Page 37 of 39

1516

Guidance to MT-3-c-ie

1517
1518
1519
1520
1521

MT-3-e enables the organization to report on the effectiveness of its actions to manage its impacts.
Tracking the effectiveness of its actions taken is necessary for an organization to know so that it canlearn if its policies and processes are being implemented optimally, to learn whether. It is also
necessary for knowing if it has responded effectively to theits impacts identified, and to drive
continuous improvement.

1522
1523
1524

The organization should also report information on the effectiveness of its actions to manage actual
impacts from previous reporting periods. This applies in cases where the organization has assessed
the effectiveness of these actions or derived lessons during the current reporting period.

1525

Guidance to MT-3-e-i

1526
1527
1528

The Processes used to track the effectiveness of actions taken can include internal or external
auditing or verification, impact assessments, measurement systems, stakeholder feedback, grievancemechanisms, external performance ratings, and benchmarking.

1529

Guidance to MT-3-ce-ii

1530

When reporting on goals and targets, the organization should report:

1531

•

how the goals and targets are set;

1532
1533
1534

•

whether and how the goals and targets take into account the sustainability context in which
the impacts take place (e.g., the limits and demands placed on environmental resources,
social and economic objectives and goals);

1535
1536
1537

•

whether the goals and targets are informed by expectations in internationallyrecognizedauthoritative intergovernmental instruments and, where relevant, by scientificconsensus;

1538
1539

•

whether goals and targets are mandatory (based on legislation) or voluntary. If they aremandatory, the organization can list the relevant legislation;

1540

•

the organization’s activities or business relationships to which the goals and targets apply;

1541

•

the baseline for the goals and targets;

1542

•

the timeline for achieving the goals and targets.

1543
1544
1545

Targets can be qualitative, (e.g., the implementation ofimplementing a management system by acertain date,) or quantitative, (e.g., reducing GHG emissions by a certain percentage by a certain
date.).

1546
1547
1548
1549
1550

The indicators used to evaluate progress can also be qualitative or quantitative. Quantitative
indicators can bring precision and enable comparisons. Qualitative information is often needed to put
quantitative information into context, enable its interpretation, and determine which comparisons andconclusions are likely to be most valid. The Topic Standards and Sector Standards include qualitativeand quantitative indicators.

1551

Guidance to MT-3-ce-iii

1552
1553
1554
1555
1556

The organization should report examples supported bythat give evidence of whether or not the extent
to which specific actions taken have been effective., such as the outcomes of internal or external
auditing or verification, data collected through measurement systems, and stakeholder feedback. The
evidence provided should show that there is a credible link between the specific action taken by theorganization and the effective management of the impacts.

1557
1558
1559
1560
1561

For example, to show the effectiveness of capacity building providedthe actions it has taken tocertainsupport its suppliers onwith improving their working conditions, the organization can reportsurvey feedback from the suppliers’ workers showing that working conditions have improved, together
with. Additional evidence the organization can provide include data showing a decrease in the numberof incidents identified through independent audits.

Page 38 of 39

1562
1563
1564

Similarly, to showdemonstrate the effectiveness of its actions to improve the quality of its water
discharged, the organization can report data showing a decrease in the concentration of total
dissolved solids (mg/L) in itsthe water discharge.

1565
1566
1567

When reporting progress toward theits goals and targets, the organization should report whether
progress is satisfactory or not. If a goal or target has not been achieved, the organization should
explain why.

1568

Guidance to MT-3-ce-iv

1569
1570

Managing impacts is typically an ongoing challenge requiring continuous improvement based onlearning from practice.

1571
1572
1573

MT-3-ce-iv does not require a detailed description of lessons learned in relation to each material
topic;. Instead, the organization can provide examples to show how it incorporates lessons learned inorder to manage impacts more successfully in the future.

1574
1575
1576
1577
1578

For instance, the organization can provide examples of lessons learned that have led to changes in its
policies or practices, (e.g., training for workers, giving additional attention to the performance of
suppliers), or that have led to plans for such changes, in order to manage impacts more successfullyin the future. Such examples can include a change to a policy, specific training for workers, oradditional attention given to the performance of suppliers.

1579
1580

Lessons learned mightmay be derived from the organization’s own activities,processes (e.g., root
cause analysis), from its business relationships, or from stakeholder or expert feedback.

1581

Guidance to MT-3-df

1582
1583
1584

The organization can explain, for example, whether and how affected stakeholders have been
involved in determining an appropriate remedy for a negative impact, or how stakeholder feedback isused to assess the effectiveness of the actions taken.

Page 39 of 39